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Bye-Bye Miss American Pie
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<blockquote data-quote="wkmac" data-source="post: 924432" data-attributes="member: 2189"><p>Hoax,</p><p>Those offshoots is why "real rate of inflation is 10%" jumped out at me. Consider this:</p><p></p><p>Taking the real rate of inflation as 10%, according to past monetary policy this would suggest an immediate tightening on the monetary supply which means interest rates must go up. When interest rates go up, the cost of borrowing does as well so obviously this immediate effect would be a cooling on the economy which is already cold based on some measures. But even moreso, with the higher interest rates, not only is the debt much worse because of debt service but so too is the deficit. If true, the ability of the gov't to further borrow to maintain current operations would come to a grinding halt just on real costs alone.</p><p></p><p>A side note is that as interest rates go up so do savings interest rates go up in money market and like investments and then many in the market especially of the baby boomer brackets begin to pull out of stocks and enter the safer fixed investments. IMO this is another reason interest rates have been kept artificially low to flush folk into stocks so others can <a href="http://www.lewrockwell.com/blog/lewrw/archives/33424.html" target="_blank"><span style="color: #ff0000">work their magic.</span></a></p><p></p><p>This now begs the question, is the real inflation rate that bad and the current core of politicos are in league to hide the truth? If true, this in my opinion makes the actions in Washington by both sides all but criminal and the core problem with America is far deeper and far worse than we are being told. But ultimately this comes down to who one believes and how information is derived.</p><p></p><p>And the ride into the graveyard of empires continues!</p></blockquote><p></p>
[QUOTE="wkmac, post: 924432, member: 2189"] Hoax, Those offshoots is why "real rate of inflation is 10%" jumped out at me. Consider this: Taking the real rate of inflation as 10%, according to past monetary policy this would suggest an immediate tightening on the monetary supply which means interest rates must go up. When interest rates go up, the cost of borrowing does as well so obviously this immediate effect would be a cooling on the economy which is already cold based on some measures. But even moreso, with the higher interest rates, not only is the debt much worse because of debt service but so too is the deficit. If true, the ability of the gov't to further borrow to maintain current operations would come to a grinding halt just on real costs alone. A side note is that as interest rates go up so do savings interest rates go up in money market and like investments and then many in the market especially of the baby boomer brackets begin to pull out of stocks and enter the safer fixed investments. IMO this is another reason interest rates have been kept artificially low to flush folk into stocks so others can [URL="http://www.lewrockwell.com/blog/lewrw/archives/33424.html"][COLOR=#ff0000]work their magic.[/COLOR][/URL] This now begs the question, is the real inflation rate that bad and the current core of politicos are in league to hide the truth? If true, this in my opinion makes the actions in Washington by both sides all but criminal and the core problem with America is far deeper and far worse than we are being told. But ultimately this comes down to who one believes and how information is derived. And the ride into the graveyard of empires continues! [/QUOTE]
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