- Joined
- May 7, 2010
- Messages
- 24,401
- Reaction score
- 10,429
- Location
- Upstate SC
- Gender
- Male
- Political Leaning
- Independent
I don't agree with this statement. FED can't get out of its position QUICKLY without spiking interest rates. But, who said they will? TWIST focused on selling short term positions to buy long term bonds to hold long term interest rates low. The current QE, the biggest one, focused on long term bonds. I have been worried about the increase in the budget item for "interest on the debt" when rates go up, but suppose the FED holds those bonds for 30 years? They are very low interest rates that we borrowed at. If the FED holds them, they will roll off slowly, interest on the debt will NOT go up for 30 years, and by that time the bonds can be paid off in inflated dollars. That is my thesis for how the FED can get out of this slowly and without damaging the economy too much.
What is your thesis for how the economy collapses?
The fed totally changes courses, in the opposite (and thus wrong) direction.
Of course that's unlikely to happen, so it's not that much of a concern.
When our economy starts to show strong growth, or inflation above the target rate, the fed will taper QE, and will follow the course that you set forth, which I believe to be the most likely scenerio (assuming that some tea party whackjob doesn't takeover the fed, or Dr. Evil for that matter, you know he is in cahoots with the fed to take over the world and all).