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| I have had the feeling that you have taken the position that you pretty much know where things have to go in the long term. If that is wrong, I have read your posts wrong. What I am saying is that climate modelers have ignored the shorter term trend and insist that they are right about the long term. They have no idea why the models have been wrong for 18 years. Climate is, as defined by the IPCC, a coupled, non-linear chaotic system. Markets are coupled, non-linear chaotic systems. To think that anyone can confidently predict either chaotic system seems foolhardy to me. You are worried about high inflation, as I understand. The Fed seems to be worried about the possibility of deflation. The EU seems to be worried about deflation. I just think deflation is equally as probable as high inflation - but one thing I'm sure about - I can't predict either with any certainty.
2. So, let me get this straight. The market does not work because "interest rates would reflect the REAL increasing risk that bloated sovereign budgets purvey." So, you *know* what the REAL risk is, do you? As for the Central Banks buying bonds - that is simply how they control the supply of money. They might not be doing their job to your satisfaction, but that's what they do. They are terrified of a deflationary cycle low, and they are using the weapon they have. Whether or not they will be successful remains to be seen, doesn't it?
As for the "efficient market theory" - of course it does not work. All you have to do is to make a roll-adjusted chart of most any commodity and it is as plain as the nose on your face. Have you ever looked at a roll-adjusted contract of bonds? It clearly shows the bias of the market going all the way back to the early 80s, where inflation expectations continued to distort the chart for decades. The idea was that with expected inflation, interest rates *had to* go higher. I'm still hearing this logic. All I can say is - look at a chart of this compared to a nearest futures chart. Of course, markets are wrong - expectations of thirty year bond prices were spectacularly wrong for decades - and, as I said - I'm still hearing the same false logic. | |
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The 4.5 trillion dollar balance sheet. Continued QE
