Brilliant cartoon, from the New Yorker 1981:
What Do Higher Rates Mean?
June 13, 2008 3:30pm by Barry Ritholtz
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Byron Wien
And we still think the longest running show in TV History is The Simpsons..
Am I supposed to increase my personal savings and stay out of debt, or am I supposed to take my savings and shopping so that the economy will do better and I will have a job so I have money to save-not-save ???
Douglas, the answer is yes.
Doug – you should ask for a raise.
There are things you can do to protect yourself from inflation.
1. Do something useful. If you can do something that people value you will be ok. Even if the world goes to hell, if you can do something useful, people will barter for your services.
2. Ask for a raise. Do it Monday. By definition, if you can’t get a raise then you are not doing something useful. You should consider a new career, more education, or going to college in the first place. If you work under a collective agreement, call your union and demand higher wages in the next round.
When you hear econimists talk about second round inflation they are talking about all the poor schmucks getting raises. The Saudis and CEO’s have gotten theirs. Now go out and get yours.
3. The people with the most too loose are those with fixed incomes. Their quality of life will decline. This means less driving, less travel, less comfort. I would advise people who are worried about inflation to call their congresspeople and demand that congress restore fiscal discipline.
We cannot live beyond our means for any longer. Tight monetary policy will mean nothing without tight fiscal policy. Get educated and be vocal.
This cartoon is perfect for today. Traders can’t seem to decide if inflation / higher rates is good news or bad news! It seems to me that both are undesirable!
Exactly why did the market go up at the end of the day? On expectation of stable interest rates or of a stronger dollar and higher rates? Greenspan said the financial crisis is ending? How would he know for sure? And doesn’t the worsening housing bust portend lower growth / corporate profits?
TGIF!
There is a time to go long, a time to go short, and a time to go sailing on this customer’s yacht. The weather is lovely in SF and I am off after days of this ‘maddening inconsistency.’
I think the positioning of CPI as “not too hot” yielded a relief rally led by people who the other day were worried the Fed was really considering raising rates.
Befuddles those of us who think business and profits are still headed lower.
And to think that we are just at the beginning of this, the longest bear market ever recorded.
What the market does day to day is of interest only to day traders. What it does decade to decade is of interest to investors. America Inc has recently recorded a lower high. Inflation adjusted because inflation really really matters over ten years. The question is will there be a lower low?
The answer to that is ….of course.
Andrew Tobias, one of my favorite financial writers, did a chronology of the 80s in one of his books.
One entry was.
Fed cuts interest rates. Dow plunges in panic selling.
Another entry further on down was.
Fed cuts interest rates. Dow soars in euphoric buying.
Anecdotally speaking, $4 gas will have a PROFOUND effect on the US economy.
If it goes higher yet, look out below.
Is that Henry Kissinger…?
Great Post! I like to check news for DJIA on my trading program. It’s hilarious the stuff you read from so called experts trying to explain why the market is doing what it’s doing. The Fed has lots of money, I know some people see the PPT as a urban myth but this last six months has made me a believer.
“Anecdotally speaking, $4 gas will have a PROFOUND effect on the US economy.
If it goes higher yet, look out below.”
I agree, the cracks are just starting to show. We need a plan for the future or it will be much, much worse in 10 years.
Sign the gas price petition supporting S.2958-The American Energy Production Act:
http://www.AmericansForJobsAndEnergy.org/
Before you blow it off as a waste of time read the steps S.2958 will take to make things better for decades to come.