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To: RetiredNow who wrote (134665)	7/16/2013 1:02:57 PM
From: John Vosilla	Respond to of 149317

What I see is the highest bond prices and the lowest yields in 30 years. This is the mother of all bubbles in bonds. This is the catch-22 the Fed is in. If they ever do decide to taper, then it will hammer bonds, as we just got a taste of. In addition, it will hammer stocks, because all this liquidity that is sloshing around has propped up the stock market like crazy. So if the Fed tapers, BOTH stocks and bonds will go down. Cash will be one of the few safe places. Now, if the Fed DOESN'T taper, then everything will continue to rise to even more bubblicious territory until it explodes of its own accord. My guess is that if we go down that path, the bubble explosion will result in 70s style inflation and stagnation. Don't know about hyperinflation, but that might also be a possibility, given the massive size and length of this experiment. Then there's the other risk...that almost every government in the world is devaluing their currency. Wow. What are the consequences of that? We're in uncharted territory. This has never happened before. Simultaneous global fiat devaluation. Don't pay too much attention to the stock market. It is driven by interest rates, increased worker productivity, psychology and of course the 10 year discounted cash flow assumptions.. Trickle down when the averages are high seems to impact J6P less and less each cycle. As to bonds we are five years into 'central planners' controlling us. More and more I believe globalization, technology and worker productivity increases can keep overall inflation much lower than we used to think.. Look at disinflation in commodities and lack of purchasing power in the middle class for additional clues. Could be energy alternatives coming on line take the sting out of high oil prices in coming years or will demand from China and emerging markets remain the story?