If Oil reaches $150 in 2011 will the Fed raise rates in 2011?

Discussion in 'Trading' started by benwm, Feb 23, 2011.

  1. benwm


    Of course, Volcker would (and did) rates rates.
    And Oil at $150 would certainly be inflationary.

    But the Fed has a dual mandate on inflation and employment, and a high oil price would have the same effect as a tax hike, slowing down the US economy.

    Stagnation, in other words.

    And would the end of zero rates send the economy and markets back in a tailspin, just what Bernanke fears..?
  2. ajcrshr


  3. Larson

    Larson Guest

    Conditions today are far different than what Volcker faced in 1980, as in much worse. US was a creditor at that time, now it is a broke debtor. Raise rates and see what happens.
  4. S2007S


    Bubble ben bernanke said inflation is under control and tame, $150 oil is nothing, he might get a little bit worried when oil starts to push up again $275 a barrel, maybe!!!!

    :p :p :p :p :p
  5. benwm


    Maybe the right thing to do. But does Bernanke think like this?

    "Rabbit in headlights", is the phrase that springs to mind,
  6. benwm


    maybe CPI will be at 2.5% then!

    So, probably more QE.
  7. Larson

    Larson Guest

    It is not even possible with guargantuan US debt. Economy would have to grow exponentially to pull US out. They have to keep lying to buy more time.
  8. benwm


    I think you're right. Vested interest of government to keep financing down.

    So that means we've reached the point where rates cannot go up, whatever happens to commodity prices.

    Like in Japan, but we get perma-inflation too.

    Or worse, Hyper... :eek:
    actually let's not even think about that. Forget the "H" word.
    Let's call it the "great stagnation" instead.
    all in lower case, not to scare anyone...
  9. S2007S


    yea give or take!!!

    Yea QE3 should be here by April, then they have to raise the debt ceiling and then more QE4 summer and QE5 by end of 2011 to keep the bull market in rally mode!!!!
  10. Larson

    Larson Guest

    I think we are Fubared. Unless miracles happen.:D
    #10     Feb 23, 2011