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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: Jess Beltz who wrote (41144)	12/28/1998 12:47:00 PM
From: Knighty Tin	Read Replies (3) \| Respond to of 132070

Jess, Asset inflation is caused by gamblers, not by investors. The stock market has always been a place to make more money than savings accounts offer. The public only notices AFTER it goes up a lot. Interest rates on corporate bonds are high. Interest rates on foreign bonds are high. Rates on munis are almost as high as Treasuries. Only Treasury rates are low. So, I would say that low rates at the long end are more due to flight to safety than either inflation or the Fed. The asset bubble has caused smart money to move out of financing lesser credits. On the short end, the lower rates are due to Fed lowering them to save the stock market and their banker friends. When inflation came in higher than the Fed wanted, they had Congress rig the formulae for CPI and PPI. Since productivity is also not coming in, these guys want to jerry-rig those numbers, too. Goods inflation is low, as it was in the 1920s. Asset inflation is high, as it was then. Rates at the long end are higher than they would be if we did not have asset inflation and an grotesquely unbalanced economy. MB