Hey folks..
listen. All this constant talk about inflation and fed cuts and stock markets and risk and whatnot has gotten me quite confused and it seems the market, too.
Here I used to think inflation was the worst enemy of any economy and that having high rates and tightening cycles should work towards combatting this. Rampant inflation is always worse than a bit of a normal recession cycle I have been led to believe.
(Btw, I've noticed there's been a really nice page made about the wording and terminology of all this stuff here
http://www.currencytrading.net/2007/...nslation-book/
)
But I still can't help but notice that even though basically every commodity known to man has gone through the roof BIG TIME the last 3-6 months(surprise, the USD devalues and the nominal value of the commod has to be compensated) and everyone from Donald's cousin to Pizza Hut seems to be noticing the effects on price inflation.
Higher rates are used to combat inflation, so we see a smart and prudent Fed go and..cut rates by 50bps. Uhm.
Has Wall Street become more important than risking having the USD go to an index value of 1 against all currencies or is an out of control inflation suddenly nothing big anymore or what important change in paradigms did I miss?
I will readily admit I am absolutely clueless and lacking in macro-economical knowledge and skills, but if everyone I know who DOES have a degree and background says that there's nothing worse than unchecked inflation, why is the guard dog against it suddenly inviting it in for tea and biscuits?
Someone please tell me what I'm missing here, because it appears that now everyone is expecting yet ANOTHER cut, and I just can't see where this is going except down the drain and against every conceivable conventional econo-logic I've been told about.
Maybe I just have it wrong though.
Please help me out!
listen. All this constant talk about inflation and fed cuts and stock markets and risk and whatnot has gotten me quite confused and it seems the market, too.
Here I used to think inflation was the worst enemy of any economy and that having high rates and tightening cycles should work towards combatting this. Rampant inflation is always worse than a bit of a normal recession cycle I have been led to believe.
(Btw, I've noticed there's been a really nice page made about the wording and terminology of all this stuff here
http://www.currencytrading.net/2007/...nslation-book/
)
But I still can't help but notice that even though basically every commodity known to man has gone through the roof BIG TIME the last 3-6 months(surprise, the USD devalues and the nominal value of the commod has to be compensated) and everyone from Donald's cousin to Pizza Hut seems to be noticing the effects on price inflation.
Higher rates are used to combat inflation, so we see a smart and prudent Fed go and..cut rates by 50bps. Uhm.
Has Wall Street become more important than risking having the USD go to an index value of 1 against all currencies or is an out of control inflation suddenly nothing big anymore or what important change in paradigms did I miss?
I will readily admit I am absolutely clueless and lacking in macro-economical knowledge and skills, but if everyone I know who DOES have a degree and background says that there's nothing worse than unchecked inflation, why is the guard dog against it suddenly inviting it in for tea and biscuits?
Someone please tell me what I'm missing here, because it appears that now everyone is expecting yet ANOTHER cut, and I just can't see where this is going except down the drain and against every conceivable conventional econo-logic I've been told about.
Maybe I just have it wrong though.
Please help me out!
Trust price. Know yourself.