Mohacsy's Safe Portfolio Member Forum

[10nisman]

History can repeat, but usually in a different form. They are trying to base their strategy what worked in a previous war on inflation.

What should they do? Inflation needs to get under control and although its headed in the right direction, stopping now could easily reverse the improvement we've seen and result in very sticky inflation that leads to much higher rates than is needed. Q4 real GDP growth is expected to be 3.5-3.9%, salary / wage gains, and service cost inflation are still well above levels under a 2.0% inflation environment, and given the strong real GDP growth current and higher rates are well warranted. Significantly lower rates (0-2%) aren't in the cards unless there's a major credit market blow-up or severe recession, which neither appear in the cards. It's interesting everyone is complaining about the Fed moving rates to levels that are still low compared to historical averages. Definitely some pain ahead, however, it's needed to flush out the extreme excesses / insanity that was created from zero rate investment environment.