We almost fell off the chart today. It would not be the first time. I already had to rescale it once since first creating it (Certainty vs. Uncertainty).
The following chart shows how fast the yellow "You Are Here" point is moving in the first chart.
If this is a fear then...
1. Why are we moving so slowly?
2. Why aren't we moving closer to the deflationary zone?
I would argue that it might not be fear, at least not yet. It may instead be an increasing realization that the era of making easy money off of money is coming to an end. Put another way, I believe that there are too many investment dollars chasing too few good ideas.
Money, again, has often been a cause of the delusion of the multitudes. Sober nations have all at once become desperate gamblers, and risked almost their existence upon the turn of a piece of paper. - Charles Mackay
Men, it has been well said, think in herds; it will be seen that they go mad in herds, while they only recover their senses slowly, and one by one. - Charles Mackay
Charles Mackay
Charles Mackay (27 March 1814 – 24 December 1889) was a Scottish poet, journalist, author, anthologist, novelist, and songwriter, remembered mainly for his book Extraordinary Popular Delusions and the Madness of Crowds.
Source Data:
FRB: Selected Interest Rates
US Treasury: Interest Rates
We are a long ways from the deflationary zone, so no one is really expecting deflation. The TIPS yields tell me that people are expecting mild to moderate inflation, or at least they want to be protected from the worst of inflation if it shows up big.
ReplyDeleteWe are headed toward the "Social Contract Ripping Zone".
Mr Slippery,
ReplyDeleteWe are headed toward the "Social Contract Ripping Zone".
It is very important that we remain outside the DPZ (Deprosperitized Zone). Unfortunately, the zone has expanded enormously over the last decade. It now covers the vast majority of the industrialized world.
The 10 UST yield continues to plunge...1.42 this am and still heading down. I find it unnerving.
ReplyDeleteAfter his trial John Edwards said: "God's not through with me"
ReplyDeleteSounds like Edwards has a job lined up at Goldman Sachs....ya know, doing God's work.
After his trial John Edwards said: "God's not through with me"
ReplyDeleteSounds like Edwards has a job lined up at Goldman Sachs....ya know, doing God's work.
1.42 has a nice ring to it. No?
ReplyDeletemab,
ReplyDeleteEdwards, what a joke! He should have just gone with it.
I'm thinking he should have said, "I didn't expect a kind of Spanish Inquisition."
To which his wife could have said, "Based on the troubles in Europe, NOBODY expects the Spanish Inquisition!"
If you can get your audience to laugh, all your sins will be forgiven. Right?
Hey, just a thought.