Gotta' hand it to Bernanke & Co. If nothing else positive can be said of them, they sure are dreamers!!! Keep waiting for 'inflation to moderate' while doing nothing. Why not throw in a wish for a super-model hot wife and private Caribbean Island for all, and scoring 50 yardline Superbowl tickets in the official fed policy commentary next time? One word: I-N-C-O-M-P-E-T-E-N-T
Believe it or not, the Fed is just reading the bond market when they say CPI is set to moderate. 10 TIPs vs 10 bonds are predicting a five year low in CPI expectations of around ~2.2%.
You've got that ALL wrong.... He's not "doing nothing"... but rather INTENTIONALLY CREATING HIGH INFLATION BY RUNNING THE MONEY PUMP AT FULL TILT... Then lying about every aspect of what he's doing and its impact. Big question.. WHY? And he may not be "incompetent"... but he IS a LIAR, AND THIEF... and he's in cahoots with the Adminstration and Congress...
Bond market rates are as phony as a 3-Dollar bill... but I don't understand why they have stayed so low...
WHY? Just trying to inflate his way out of short term disaster without raising interest rates. Only three months to go and then it is all someone else's nightmare. The resulting consumer recession will lag by two or three months at least so in effect he is there already. Well done B here is your bonus.
Yes, even a quarter point rise would definitely adjust market psychology, provide some clarity, and signal some seriousness about inflationary risks. And I doubt it would materially affect the economy in any significant way. It's an almost no-lose, win-win proposition.
You don't get it (I often scold Makloda the same way but this time it's HE who get's it). What markets NEED an inflation fighting signal? Is it Oil down 30 bucks in a few weeks? Or Gold off 20% from it's high? Or the rallying dollar? Or the Long Bond at 4.5%? I agree these cuts are inflationary but GUESS WHAT. The markets disagree with us. Move on.........
Inflation will be a problem if incomes rise too. Because the union rate is low in the US that won't be happening soon. If incomes do not rise then demand goes way down while supply increases. Supply increases because the market price is inflated to high numbers so suppliers try to sell as much as possible at high prices. Demand goes down because since incomes did not catch up nobody has the income to buy. The market adjusts. If prices went up but so did incomes, then that would create an inflationary cycle. Probably later becoming hyperinflationary. So I predict that incomes will go down, inflation will remain above average, growth will go down, and people will eat less, save more, and the obesity rate will fall from the record number to something less of that. When the market finally adjusts I think the US will be overall more healthy economically and otherwise too.