CANADA'S NEW PRIME-MINISTER TELLS U.S. "TO BUTT OUT"

Agreed,

I am not saying that at some point inflation will not return, but that it can be predicted by the Fed, and moderated by the Fed's micro-management of the short end, I am very dubious. {/quote] Perhaps they are conscious of the self-fulfilling potential of their ritual action to 'exercise this power' - and, as well, of the destructive effects of the example of no action on their part.

Quote:

In fact (and I have said this before somewhere) I suggest that the Fed's micro-management of the short end actually exacerbates overall long term interest rate volatility.

Undoubtedly that has been true in several cases. However we did get a relatively soft landing from the deflation of a very large bubble in 1999. It may be that the effect of this (we hope) damping of the economic cycles may be to avoid the occasional wild excursion at the cost of amplifying some of the miler cycles.

timberlandko wrote:

Its been mentioned before, without apparent effect (and I see no reason a repeat might change anything) - the US deficit, in terms of percentage of GDP, is well within historically proven sustainable norms, and is a lower GDP percentage than that of the deficits of a number of nations which take pains to point out the magnitude of the US deficit. Get real, folks: a slice of pie is sized relative to the overall size of the sliced pie. A pound of pie slice is a pound of pie slice, any way you figure it. However, a pound removed from a 5 pound pie puts a much bigger empty spot in its pie than does a pound removed from a hundred pound pie.

I'll remember this economic flim-flammery when we start having to pay the tab! I should say, when our children start paying the tab. Since when does GDP have anything to do with the National Income? You know, things like taxes, etc. Interest payments have already shot up with minimal interest increases. Wait till interest rates get to where they should be, and indeed, where they are going!

One thing the Republican Party has shown us ... they don't really care if they bust the bank, just so they do it the way they want to do it!!

Anon

Anon-Voter wrote:

.... Since when does GDP have anything to do with the National Income? You know, things like taxes, etc. Interest payments have already shot up with minimal interest increases. Wait till interest rates get to where they should be...

Remarkable confusion and incoherence.

Anon-Voter wrote:

timberlandko wrote:

Its been mentioned before, without apparent effect (and I see no reason a repeat might change anything) - the US deficit, in terms of percentage of GDP, is well within historically proven sustainable norms, and is a lower GDP percentage than that of the deficits of a number of nations which take pains to point out the magnitude of the US deficit. Get real, folks: a slice of pie is sized relative to the overall size of the sliced pie. A pound of pie slice is a pound of pie slice, any way you figure it. However, a pound removed from a 5 pound pie puts a much bigger empty spot in its pie than does a pound removed from a hundred pound pie.

I'll remember this economic flim-flammery when we start having to pay the tab! I should say, when our children start paying the tab. Since when does GDP have anything to do with the National Income? You know, things like taxes, etc. Interest payments have already shot up with minimal interest increases. Wait till interest rates get to where they should be, and indeed, where they are going!

One thing the Republican Party has shown us ... they don't really care if they bust the bank, just so they do it the way they want to do it!!

Anon

Its simple economics, Anon. Browse the tables, current, historic, and comparative, available at the Bureau of Economic Analysis.

Something shown, BTW, is that over the years and forums we've known one another, not only my refusal to buy into the economic doom-and-gloom scenarios you've posed, but my economic outlook have caused you some consternation. Given the consistency of economic developments over those years, I can understand why you might be upset

Perhaps they are conscious of the self-fulfilling potential of their ritual action to 'exercise this power' - and, as well, of the destructive effects of the example of no action on their part.

However we did get a relatively soft landing from the deflation of a very large bubble in 1999. It may be that the effect of this (we hope) damping of the economic cycles may be to avoid the occasional wild excursion at the cost of amplifying some of the miler cycles.

I do like it!

Hi Anon-Voter,

I have not read your posts really carefully as I was chatting with georgeob1. If you could put down, in as clear and direct a manner as possible, two or three main points you feel demonstrate your fundamental perspectives, I will comment without any nastiness etc.

This I can tell you ... I learned the lessons of Real Estate in the early 80's ... get the hell out when it's at the top! I've been doing that little by little, and we will be divested of U.S. holdings in a fairly short time!!

If I was younger, I would start learning Chinese!

Anon

Bay Area home sales tumbled to their lowest level in five years last month, and prices hovered well below record territory, further evidence that the region's seemingly unstoppable housing boom may have peaked with the blistering market of 2005.

Hi Anon-Voter

Is one of the below, the point you wish to make?

1)Should interest rates go up enough, over a short enough time, certain sectors of the economy will not do as well. If that is your point, I agree.

Short term rates in themselves don't worry me ... It's when they, in effect, become long term by default.

2)Certain sectors of the US real estate market may be over-bought, and are due for a correction. If that is your point, it may well be true. An historical perspective will give a more fundamental perspective on this. By fundamental I mean the technique of fundamental analysis which is most often applied to stocks, but which can apply to real estate. By historical perspective I mean 20 years from now.

I have answered this to a degree, but will add to it

3)The US's economic interaction with China causes interest rate increases and hence an imminent across the board housing market decline. If that is your point I disagree for a number of reasons, but I'll list only two, to keep things clean.

My main concern with our debt to the Chinese is that it's almost a Trillion Dollars. There seems to be no limit! Don't think I'm a China basher ... matter of fact, I think they are elegant people. I've been in China three times, and I have the greatest admiration for them. Matter of fact, I think they are tomorrows major super power.

a) It is an intentional act by the Fed to increase interest rates. This has been done by the Fed in an attempt to moderate the so-called boom to bust swings. This interest rate increase is not a response to Chinese US economic activity. This type of interest rate tweak is done all the time by the Fed, both up and down. I personally do not approve of the tweaking, but that is another matter entirely.

We are borrowing to pay for the war that we are so aggressively pursuing. They are financing it for us. If nothing else, we have to pay the interest payments, and come up with the money to pay the indebtedness. I imagine we will just extend the debt, at higher interest rates than the juicy rates we know have.

b)Given that the goods coming from China are plentiful, inexpensive and getting ever cheaper and better, the action of Chinese trade with the US would actually be counter to an inflationary trend.
US trade with China would in fact, tend to decrease interest rates not raise them.

Yes indeed, as a matter of fact, that is partially my point. Last time, we paid off the VietNam war in part with the hyper-inflation of 1975-1980. The dynamics now, as you point out, is against hyper-inflation saving our butts again!

In very, very general terms from a supply / demand equation:

Rates go down when there are too few dollars chasing too many goods.

Rates go up when there are too many dollars chasing too few goods.

Note: I am not referring to the Fed here, who I would argue has a less constructive influence then some others might assert.

I may be hijacking this thread...
Anon

Anon-Voter wrote:

I may be hijacking this thread...
Anon

When did that consideration ever stop you?