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Strategies & Market Trends : The coming US dollar crisis -- Ignore unavailable to you. Want to Upgrade?

To: ggersh who wrote (5370)	3/22/2008 5:00:36 PM
From: Tommaso	Respond to of 71462

No, a series of interest rate increases by the Fed has always brought the stock market down.

To: ggersh who wrote (5370)	3/22/2008 6:15:22 PM
From: Real Man	Respond to of 71462

Not quite correct - the Fed follows the market. When a recovery takes place, they raise. When the economy weakens, they lower. Rate raises were well telegraphed and done in baby step this time, in order not to upset the derivatives markets. What we are talking about is the possibility of a meltdown in the treasury bonds market as a result of lower rating of US government and currency/inflation risk. This selling is a result of the market forces and goes against the Fed as the Fed loses all credibility. It happened to other countries in financial/systemic/currency crises. Of course, the Fed could raise too to protect the buck at some point, but clearly, this is not their priority at the moment, so the market could do it for them, as it re-accesses currency and inflation risk of holding US government securities.