[ Follow Ups ] [ Post Followup ] [ Mosler dot ORG BBS ]
Posted by warren mosler (72.161.109.198) on 12:42:02 11/23/07
Big 'inflation' day today- food, energy, gold, stocks up.
Stronger yen doesn't seem to be the stress sign it's been for the last
few months.
most interest rates generally flat to up a touch with yen and crude up.
commercial paper- mostly asset backed- down another 20 billion as
banking system and others continue to absorb lending
talked to a friend/prof at univ of chicago- says it took 6 years for
headline to feed into core in 70's, certain it's happening this time
around as well.
rising cpi tells the fed that current growth is too high, and that non
inflationary growth is lower.
their forecasts indicate what they think non inflationary max growth
is, as their forecasts imply fed policy responses that keep the econ
growing at max non inflationary growth.
note 10 year tips are at about cpi + 1.6% indicating markets expect
the fed to keep fed funds at a 'real rate' over cpi averaging under 2%
for the next 10 years. This is a strong 'the fed doesn't and won't
ever care about inflation for the next 10 years' statement that the
fed watches closely..
Big transition on the way from 'fed doesn't care about inflation, so
why should I' back to low inflation a prerequisite for max long term
growth and employment as meltdown risk from 'market functioning'
irregularly subsides. and a relative value story can not be allowed
to become an inflation story at any cost.
Losses at places like freddie, fnma, banks, not enough for business
interruption.
Also, seems fundamentally sound bond insurance businesses seem to be
finding new capital, offering a bit more evidence the pendulum is just
beginning to swing away from 'fear to greed' so to speak as in a
previous email.
[ Follow Ups ] [ Post Followup ] [ Mosler dot ORG BBS ]