To Do: Store 50 Cases of Franks n' Beans in the Basement
This analysis suggests that the Fed is likely to be more dovish and monetary policy will be looser into 2009. In the words of Frank Barone..."Holy Crap!"
The only thing I have to cling to is this. Fortunately, in the long run, Brian is usually right. I've been tracking his views since 2001 and you would have made lots of money listening to him.
The only thing I have to cling to is this. Fortunately, in the long run, Brian is usually right. I've been tracking his views since 2001 and you would have made lots of money listening to him.
posted by Donny Baseball at 9:49 AM
2 Comments:
shock and awe... Question: Which one is more important in controlling inflation, change or level of ininterest rates? If it's the level, then the act of raising rate alone is not enough to boost the dollar and bring down prices. What if it takes a fed funds rate of >6% to get inflation under control again? At 6% fed funds rate, dollar would strengthen and oil as well as gold prices should drop like a rock. But what's going to happen to the economy and the stock market? A long recession and deep bear market probably. It looks like we could have a repeat of either 1973, or 1980. I am hoping it won't be the former.
Level is important. Going from 2% to 5% is not the same as going from 5% to 8%.
This episode has given balance sheets some time to repair. The big demon is inflation. Curing that will net out positively against any effects of rising rates. IMHO.
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