mn_feeder - 11/21/2013 10:42

I don't understand why you believe that interst rates can't rise?

We are ALREADY at rediculous levels of debt. What does it matter how much it 'costs' the govt to service the debt? The FED is buying it from money created from thin air? What would it matter if instead of 500 billion interest or 5 trillion? If the FED is willing to purchase the debt it won't matter. All of this will of course provide downward pressure on interest rates, but it doesn't mean rates can't rise.

I think we can agree that the massive amounts of currency being created should have inflationary consequences. In fact isn't that what the FED wants? They want more inflation! Thats what the point of QE was wasnt it? So lets say eventually they get what they wanted but it starts climbing higher than their ideal. What weapon does the FED have to fight inflation? They almost have no choice but to raise rates. SO the FED will ultimately want rates to rise to control inflation. I see no reason the FED couldn't continue to buy treasuries (to keep pace with the higher supposed borrowing costs of the govt) AND let rates go up at the same time.

It isn't different this time. It never is. Maybe it will be interst rates this time. Maybe low commodity prices. Maybe the govt raises property taxes to fill deficit holes. Maybe all three. Who knows, most have no idea what precludes the down cycle for an asset, otherwise they wouldnt have bought at the top!