Thursday, November 20, 2014

Mount Falling Knife

The following chart shows the 10-year moving average of the 10-year treasury yield.

Click to enlarge.

Feeling lucky? Looking to catch the surgical steel? Got financial gauze and first-aid tape?

“The average American in 1940 had an 8th grade education. The post-war prosperity of this country was built by 8th graders." - Mark Steyn

And yet, our best and brightest ivory tower thinkers of the modern financial age offer us a seemingly neverending stream of rising interest rate theories. Do they think our heavily overleveraged society can actually handle higher interest rates? What other explanation could there be?

For what it is worth, the 10-year treasury yield is 2.33% as I type this. Can it go higher? Of course it can. As any 8th grader might point out, there are always two directions it can go.

November 11, 2014
Fed's Plosser: Low rates 'should make us nervous'

"There are many indicators that tell us interest rates are too low," Plosser told CNBC from the UBS European Conference in London.

"There is no precedented history to have rates at zero. I think we are really behaving in a way which is outside of historical norms and that should make us nervous," he added.

Plosser conceded that "wage growth has been very modest" and that falling oil prices were pressuring short-term inflation lower—but said that rates were too low nonetheless.

Perhaps Plosser should ask a Japanese 8th grader for precedence guidance?

Hey, that gives me an idea. Could we outsource the Federal Reserve work to Chinese 8th graders? Think of the money we'd save! Prosperity, baby. That's what I'm talking about. Look, all I'm saying is that if the Fed can't figure out why interest rates are where they are then what do we have to lose by outsourcing the interest rate setting work? Seems like a no-brainer!

And lastly, I'm growing increasingly concerned about a potential sarcasm bubble. I'm having a difficult time telling reality and sarcasm apart. I had to read the Plosser article twice just to make sure it wasn't written by America's Finest News Source.

Source Data:
St. Louis Fed: 10-Year Treasury Constant Maturity Rate


Anonymous said...

I think you'll find that sarcasm is a derivative of bullshit. Bullshit is infinite.

Prosperity, baby. That's what I'm talking about!

Stagflationary Mark said...


I'll look, but I doubt I'll find...

June 7, 2010
The Onion: Massive Flow Of Bullshit Continues To Gush From BP Headquarters

"We must all work together if we're going to cure our nation of this addiction," Palmer said. "The sad fact is, the United States has been running on bullshit for decades."

Learn something new everyday! Hahaha! Sigh.

Stagflationary Mark said...

Speaking of bullshit...

There is no precedented history to have rates at zero.

3-Month Treasury Bill Yield (1934 to 1947)

I think most people would think it's close enough to zero for government work.

EconomicDisconnect said...

I am glad I skipped out on markets a while ago. All the same stuff as I have seen 2 times before. What really soured me on it was when the market went silly stupid those that manage money for their living (is there a more value-less job?) just got giddy and forgot this crap ends up really bad. It's like a drug pusher except we all have to pay when it blows up. A guy like ReformedBroker is smarter than he posts and stuff, he has been wrong about every single thing (strong housing recovery, Japan growth (LOL, LMAO) and about 10 other things) but a rising market on liquidity makes him looks smart. I used to know him, he is, but just lost chasing the $$$. Sad really.

Stagflationary Mark said...


(is there a more value-less job?)

I know that's a rhetorical question but I feel the need to answer!

Would you include investment advice employees in that? Couldn't they just elect one Investment Advice President and have him/her do all the talking? Do we really need 178,300 of them in this country (seriously, that's how many there are)? ;)

Stocks for the long run, blah, blah, blah, prepare for rising interest rates, blah, blah, blah, keep an emergency fund, blah, blah, blah, consider putting more money in your 401k, blah, blah, blah, try not to spend more than you earn, blah, blah, blah, have you considered paying down your debt, blah, blah, blah...

Hey, I'm not even suggesting that all the advice is bad. I'm simply saying that when roughly 178,300 all offer pretty much the same advice, then 178,299 of them are probably redundant, lol. Sigh.