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Strategies & Market Trends : ahhaha's ahs -- Ignore unavailable to you. Want to Upgrade?

To: rich evans who wrote (10289)	11/23/2007 9:39:19 PM
From: ahhaha	Respond to of 24758

How can the Fed control the 10 year Treas bond rate? Can't. It is under 4% and headed lower it seems. This yield drop is being caused by fear. Nothing to do with the usual macro factors like inflation. FED keeps enough money in the system to keep inflation going while debt deflation occurs. The debt deflation is of more concern to investors than traditional bogeys like inflation, and causes them to move to less risky assets like Tbond. Nevertheless, inflation which should be front and center for the Tbond since it's the true sole factor, continues unabated. When the pseudo debt oriented deflation exhausts itself, Tbond and FED will have to reconsider where they've gotten themselves given that there will be no impact on inflation once Ahhaha Equilibrium is factored out. I strongly believe by that time oil will be in a good downtrend, but that won't through inverse Ahhaha Equilibrium take away from the will to inflate. This would indicate that the FF rate is too high as the market for short 3 month paper is much lower then the FF rate. You have to separate short term effects due to exogenous events from long term ones. FED sets FF rate and that affects the economy to some random degree. FED never sets the FF rate at a level that would null out inflation. Never. If they did, it would bring about a result, at least in their way of thinking, that would threaten their independence. They fear that Congress would socialize money creation by taking that function under its wing. That's their primary fear and their primary rationalization for practicing interventionalism and for intervening on a criterion of erring on the side of ease. When you understand these dynamics you realize that these short term moves are irrelevant and that they merely indicate fear driven short term bias. I think the Fed must follow the market which is lowering FF rate even though you think the FED should raise. You believe in reacting to superficiality, acting on expediency. I believe that it's critical to act on principle especially for a body which is built on principle. All the monetary trouble in the past has been due to FED's continuing errors which were brought about by FED reacting to short term conditions. Some of the ones in recent history are AG's Asia Crisis pump, AG's LTCM pump, Ag's y2k pump, AG's 3 year negative real rate accommodation, Bernanke's sub prime accommodation. They act as though they only react to long delayed data, and the result of their action is superfluous or counter productive, because by the time it hits, the crisis is over, but the money effectively created spills over and causes new imbalances. AG denies it but we all know the 3 year negative real rate accommodation lit the RE inflation. Dollar value does not seem to be controlled by FF rate. If FED had raised FF rate from 5.25 to 5.5, it would have had no effect on the economy and would not have exacerbated the sub prime derivative debacle, but it would have reversed the dollar because it would have restored integrity, restored confidence of foreigner investors who have ALL the dough, in that the nominal value of their investments wouldn't have an automatic and continuing downward adjustment. Isn't this obvious? Where are the great intellects at FED? It may be hard to believe, but they simply can't see that all of economics, all of finance, is a confidence game. They think they can control the inputs to assure eternal prosperity, and they think they can do this independently of human psychology, because they think human psychology is merely a matter of paper wealth. Make 'em think they're wealthy with eternal prosperity and all bogeys can be eliminated. Hah! Puny intellects. None of them could stand up against me in a debate. When FF rate was very low in the 1% range dollar was much stronger. Trivially false. Go check a chart. I get it. To you, not falling as fast is "stronger". Supply of dollars seems to exceed the demand these days but the decline in dollar has been gradual. The dollar isn't falling because of S/D. Currencies never change in their conversion rates due to that kind of characterization. In Econ 101 you learn that price change may be represented as the equilibrium between marginal demand and marginal supply, never by total demand and total supply. Elasticity has a lot to do with it too. With the dollar a little selling sends the dollar down a lot, but a lot of buying doesn't send it up much. This is due to psychology, belief about the future, a future that FED undermines. The Feds projections for inflation and GNP growth for 2008 and 2009 are interesting to me. They say inflation stay at 2% or so. They even put out a claim for 2010. It's total bullshit. It's jaw boning, a silly attempt to manipulate psychology. Haven't you learned yet that they fly policy by the seat of your pants? This must mean they think commodity/oil prices have reached an end to increases- a Patinkin equilibrium? No, like the rest of us, they have no idea about oil. Also, it's Ahhaha Equilibrium. Patinkin has been co-opted into some kind of socialist apologist. He couldn't stand up to me about his own theory. That's why I have renamed it. As I've explained before, flip flop from coherency to socialism plugging is the Nobel way to glory and more money to pursue nonsensical projects whose true motive is ego aggrandizement. So only monetary inflation matters which they plan to keep in check. How can the FED control the FF rate? Do you think they wanted to be put in a position where something else is forcing them to lower it? In light of that how can you say, "they plan to keep in check"?