Thursday, Nov 30, 2006

US core inflation up 0.2%

FT: US inflation remains stubbornly high

How can they lower US interest rates ?

Posted by holding out @ 03:37 PM (460 views)
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1. harold said...

How can they lower US interest rates ?

Their currency is going down the pan - the chance of an interest rate cut in the US? Absolutely none whatsoever.

Basically it's over for the US - they don't make a fraction of what they consume, they are printing money like its was fashionable wall-paper, no one want to hold dollars in their reserves anymore, they are unpopular internationally (to put it mildly), inflation is exploding and house prices are crashing AND they are probably going to have to hike IRs to protect what remains of their debased currency. A superpower no more (bar the shouting) - Happy Christmas from Mr Greenspan (no irony intended).

Thursday, November 30, 2006 07:27PM Report Comment

2. nearly30 said...

Harold - seems to be a natty trick for the US to get out of these situations - but maybe not this time.

Recently Former Fed Chairman Pat Volcker said:

"If I were a biologist I'd call this a perfect example of symbiosis," Volcker said during a February speech at Stanford University.

"Contented American consumers matched against delighted foreign producers. Happy borrowers matched against willing lenders. The difficulty is, the seemingly comfortable pattern can't go on indefinitely."

Volcker believes a crisis is unavoidable, and he claims that investors will lose their confidence "at some point," creating serious dilemma for "both exchange markets and interest rates."

The former Fed chairman thinks we need to make sure foreign investors hold their confidence in the U.S. because they're the ones doing all the investing. They need to know "those trillions of dollars they are piling up are going to be protected against inflation."

Oh and this was written on 10th June 2005!!!

Thursday, November 30, 2006 09:32PM Report Comment

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4. Nohpc said...

So what? They hit a recession for a few years and then boom again. That is the nature of the world. In the words of Boyzone.. life is a rollercoaster just gotta ride it! PS i don't like boyzone

Thursday, November 30, 2006 09:49PM Report Comment

5. harold said...

Wise words from Volcker. He was the guy that saved the US in the 80s with painful IR medicine only for Greenspan to spend the winnings (and more) in the 90s.

Friday, December 1, 2006 01:37AM Report Comment

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