Free Republic
Browse · Search
Bloggers & Personal
Topics · Post Article

Skip to comments.

Economy Slowly Ebbing in Rising Tide of Inflation
Citizen Watch Report ^ | David Haggith

Posted on 10/24/2024 3:34:46 AM PDT by davikkm

Two things, each going in the opposite direction, make the headlines repeatedly today—neither of which the Fed wants to see.

The Dow tumbled fairly hard today (-400), but the real news is the reason it fell. According to CNBC, the stock market’s most troubled day in over a month is happening because Treasury yields have been rising and competing with stocks. Treasury yields started rising when the Fed started lowering rates; and, according to John Rubino, there may be no surer sign of a bond vigilante rebellion. Or, as he put it, “Bonds don’t trust the Fed.”

This “isn’t supposed to happen,” Rubino says:

When the Federal Reserve cuts short-term interest rates, long-term rates generally fall in tandem. But since the Fed’s “shock and awe” 50-basis point cut in September, bond yields have spiked….

Bond traders appear to doubt the Fed’s ability to lower rates and hold inflation in check. That’s bad in the long run since the only thing that gives value to a fiat currency is the market’s belief in central bank omnipotence.

(Excerpt) Read more at citizenwatchreport.com ...


TOPICS: Business/Economy
KEYWORDS: blogpimp; inflation

1 posted on 10/24/2024 3:34:46 AM PDT by davikkm
[ Post Reply | Private Reply | View Replies]

To: davikkm
Transitory.

Time for a new buzz word?

2 posted on 10/24/2024 3:39:20 AM PDT by Kudsman (Hey, Democrat, leave those kids alone!)
[ Post Reply | Private Reply | To 1 | View Replies]

To: davikkm

Inflation hides a lot of sins. Monetary transactions increase in dollar terms to hide the fact they are decreasing in real value.


3 posted on 10/24/2024 3:41:02 AM PDT by MMusson ( )
[ Post Reply | Private Reply | To 1 | View Replies]

To: davikkm

Creating more and more government apparatus and printing more and more dollars.

Either the Feds are ignorant, or they are intentional.


4 posted on 10/24/2024 4:56:03 AM PDT by lurk (u)
[ Post Reply | Private Reply | To 1 | View Replies]

To: davikkm

[(As I wrote yesterday, it will be the Fed’s mismanagement of its fiat money that does the dollar in, not some rising-star competitor. That will most likely happen because the Fed loses trust, but there won’t be some other currency that has risen to take its place. More likely a move toward gold and silver.)]


Until long bonds pay more, maybe substantially more, many will just stay in Treasury bills, which pay 4.5%. The 4.25% that 10-years currently pay is way optimistic about future inflation. Precious metals markets involve way too many other variables, and aren’t really big enough to provide the liquidity money managers demand. Without that liquidity, they will lose significant amounts just buying or selling.

For retail investors buying and selling gold coins, it’s even worse. If you buy a Krugerrand today and sell it tomorrow, without any price change, you will lose 5% of its value, because that’s the gap between what dealers will buy and sell at. Whereas any given money market mutual fund will cost you nothing to get in and out of. The value going in and coming out is the same: $1. And unlike gold, money market funds (Invesco, Fidelity, et al) will pay you at least the current T-bill rate, about 4.5%.


5 posted on 10/24/2024 5:18:04 AM PDT by Zhang Fei (My dad had a Delta 88. That was a car. It was like driving your living room)
[ Post Reply | Private Reply | To 1 | View Replies]

To: davikkm

Ebbing in rising tide of inflation
Going to the beach. Let’s see who’s swimming naked! Who will The Fed give life jackets?


6 posted on 10/24/2024 4:01:21 PM PDT by griswold3 ( Robespierre and Pol Pot were “unburdened by what has been” Harris the "Year Zero")
[ Post Reply | Private Reply | To 1 | View Replies]

Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.

Free Republic
Browse · Search
Bloggers & Personal
Topics · Post Article

FreeRepublic, LLC, PO BOX 9771, FRESNO, CA 93794
FreeRepublic.com is powered by software copyright 2000-2008 John Robinson