This subject has been beaten to death. It just proves how gullible and obedient people are in our days.
Yeah, as long as the credit cards keep increasing their lines. The new plasma screen keeps attention away from the fact that food prices have experienced astronomical inflation.
Some of yesterdays benign news>>>>> The Philadelphia Federal Reserve's manufacturing index, which tracks the Mid-Atlantic region, fell ominously in May, down to 7.3 from 25.3 in April. >> and the earlier Empire index was pretty bad too.
Mayeb deflation is going on... And we just hit the peak of inflation with home prices,etc. Now, we'll go into the "Japanese" phase and have deflation for the next 10years!! Whoa! They kept lowering their rates to almost 0% and no effect on their economy.
I think you are dead on. When the economy rolls over, it may be hard to stimulate this time, and commodity prices will take care of themselves. This sharp reversal in yields back to near-historical lows is sudden and amazing.
Perhaps, the bond market is discounting that once the real estate bubble cools off/burst, then there's nothing else going for the U.S. economy! Thus rates are going back down... Monetary policy is not going to work this time around when you already used up all your juice with low rates. That's what the Japanese found out. They tried to stimulate their economy for 10years. Couldn't do it even at 0% rate! The banks are handing out FREE MONEY with NO INTEREST and still no pick up in economic activity.. You heard it hear first.
This too, is my fear. I think that there is a very strong attempt by the central bankers to avoid this fate by inflating the economy, and attempting to get both short and long term interest rates higher to allow room to ease if necessary. The price inflation in real goods however (those NOT made in the proc ) is somewhat confusing. Could we be entering into real price inflation with stagnant wages and low yields? Ugh. Awful. I think everything hedges on a credit crunch. If the banks decide to stop loaning, watch out. That's my sign to duck and cover. Frankly, right now, I have very little idea of which way things will go. I think it is very wait-and-see with a close eye on maintaining relatively liquid investments.
I agree the bond market going up and commodities and the euro going down is sure contra to what everyone in the world was saying a months ago about the dollar cratering and china and the industrialized countries pushing demand for commodities higher. Hopefully instead of deflation perhaps - this is just the world puking out euros. Maybe everyone all at once was not so sure the Euro was worthy of its challenge to the dollar as "gold" standard of money.