$12 a barrel oil and 9% ten year interest rates....
MGLICKER
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...happened in 1986. The fed was apparently not concerned about deflation.
Cohodk......
Cohodk......
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Knowledge is the enemy of fear
<< <i>What happened to the $12 oil 9% interest rates title? >>
Your wish is my command!
The good old days?
The bad new future?
Todays morass?
Knowledge is the enemy of fear
Of course after that the oil and PMs shoot up like rockets.
I heard someone say recently that consumer price deflation is not a problem. What the Fed is terrified of is ASSET price deflation. So many inflated asset prices are written down in balance sheets offsetting debts or used as collateral for loans that if the underlying properties value was chopped it would blow up the financial part of the economy.
Banks made bad loans on overvalued property and if you marked these things to true market value they would explode.
If joe Sixpacks house was cut from $300,000 to $150,000 and he had a mortgage as long as he intended to remain in it he wouldn't be harmed. Of course the government would continue taxing at the higher rate as long as they could get away with it but that is an issue too.
The Fed is fighting deflation to prevent the ponzi scheme from unraveling.
<< <i>I heard someone say recently that consumer price deflation is not a problem. What the Fed is terrified of is ASSET price deflation. So many inflated asset prices are written down in balance sheets offsetting debts or used as collateral for loans that if the underlying properties value was chopped it would blow up the financial part of the economy.
Banks made bad loans on overvalued property and if you marked these things to true market value they would explode.
If joe Sixpacks house was cut from $300,000 to $150,000 and he had a mortgage as long as he intended to remain in it he wouldn't be harmed. Of course the government would continue taxing at the higher rate as long as they could get away with it but that is an issue too.
The Fed is fighting deflation to prevent the ponzi scheme from unraveling. >>
^ Why "Mark-to-Market" is not a good thing.
In an honest world "mark to market " is the ideal . Some would say its impractical if everything you owned was continuously changing in value. I think the idea would paralyze people to varying degrees .
That being said , "mark to fantasy" was never the answer either.
There has to be a middle ground somewhere.
<< <i>In an honest world "mark to market " is the ideal . Some would say its impractical if everything you owned was continuously changing in value. I think the idea would paralyze people to varying degrees .
That being said , "mark to fantasy" was never the answer either.
There has to be a middle ground somewhere. >>
What "Mark-to-Market" is, is Mark-to-Fantasy" as the adjusted value is notional on a performing asset. It literally destroys the lending value of the asset. Mark-to-Market exacerbated the mortgage loan crisis that was caused from improper ratings assigned to Freddie & Fannie mortgage tranches. An unnecessary crisis caused in whole, or mostly, by govt backed fraud and over regulatory intervention in what should be private markets. In the end game, it is still the responsibility of private CPA firms to sign-off on the books of the lenders. Govt regs never changed that. Those regs just got in the way.
<< <i>So what should we talk about?
The good old days?
The bad new future?
Todays morass? >>
The recovery and how everything has been fixed.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
<< <i>So what should we talk about?
The good old days?
The bad new future?
Todays morass? >>
Let's start with free market interest rates.