Tuesday, May 26, 2015

Two Noteworthy Astrological Interest Rate Predictions of Fed Economists

May 26, 2015
Fed’s Fischer sees short-term rate at 3.25%-4% in three to four years

Mr. Fischer said observers focus too much on when the Fed will start raising its benchmark short-term rate from near zero, and instead should think more about where interest rates are headed over time.

I agree. I don't ask my astrologer how my first bet will do in the casino. I only want to know how much I will ultimately win! Who cares about all the ups and downs? A good astrologer should filter that out for me, much like Fischer has done here.

3.25% to 4.00% in 3 to 4 years! Count on it! I love this math. Stick in the three to fours for both magnitude and duration. Keep it simple enough for us all to understand! And if we extrapolate it out a decade, we might even make it to Greenspan's hilarious 10%!

September 17, 2007
Greenspan sees double-digit rates: report

WASHINGTON (Reuters) - Former Federal Reserve Chairman Alan Greenspan said in an interview published on Monday the Fed would have to raise interest rates to double-digit levels in coming years to thwart inflation.

Patiently waiting to thwart that inflation! Just need to work our way through the backside of the popped deflationary credit bubble and 6+ years of ZIRP first, lol. Other than that, Greenspan was spot on!

Loyal readers can probably anticipate what comes next, in honor of both Fischer and Greenspan.

That's right. It's Clown Horn Tuesday! Woohoo!

In all seriousness, it takes serious balls to predict 4% short-term interest rates in 4 years when the 30-year treasury bond yields just 3%. Even if he's somehow right, that's got major financial crisis written all over it. How the f%^k does he think our weakened overleveraged society can survive that? Need I remind him what the itty-bitty taper tantrum did?


Anonymous said...

I also find it interesting that people assume The Fed would have any interesting in "fighting inflation". Seems to me that - world wide - the Central Banks have been trying to create inflation for a decade (in Japan that would be decadeS). There's a reason they are trying so hard to do so. But, people assume that if - somehow - inflation were to magically appear the CB's would suddenly "fight" the very thing they've been trying to cause?

We had inflation after WW2 in order to pay-off of war bonds (ok, fine, screw the peasants who bought them). Seems like now, inflation in the only hope that exists to pay-off the (uh) Bling-bonds.

Stagflationary Mark said...


You summed up why I prefer inflation protected bonds over nominal bonds. It isn't that I think TIPS will necessarily do better. It's that nominal bonds could ruin me financially a lot easier than inflation protected bonds can, and there is something to be said for the extra peace of mind.

Extra peace of mind should not be confused with actual peace of mind though. I can't think of any investment that offers me that. It's kind of like comparing many glasses of raw sewage and trying to determine which is most palatable, lol. Sigh.

There will come a time when preservation of capital is more important than capital appreciation again. Won't be pretty for anyone more than likely, but until then we're apparently supposed to continue to party like it's 1999. Go figure.

mab said...

It's no wonder Fed heads get paid $250K to give speeches. The wisdom of these people is priceless ..... at least from a heckling perspective.

During the dot.CON bubble that dipstick Greensham was predicting that all Gov't debt would be "paid-off" in a decade or so. You can't make this sh%t up.

Out financial system is a sham. It makes a complete mockery of the notion that prudence and hard work are worthwhile endeavors.

Stagflationary Mark said...


This is the guy who made $250k speeches possible, lol.,Sigh.

Rob Dawg said...

For get the shortest time frame and forget the higher rate. 3.25% in 4 years is 12 rate hikes of 25bps in the next 13 quarters.

No, let's not forget the short max scenario. That's 15 rate hikes of 25bps in the next 11 quarters.

Fischer is insane.

Stagflationary Mark said...

Rob Dawg,

Stanley Fischer is the master of clarity and a king of artful positioning!!

Fischer was a master of clarity and a king of artful positioning. His opponents would see where he was going but were powerless to stop him. - Bruce Pandolfini

Oops. My bad. That's Bobby Fischer. ;)