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What Exactly Is An "Extended Period"?

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April 30, 2010 – Comments (1)

I gotta admit I am again disappointed in the Fed for their most recent "rates will stay low for an extended period" shmeal.  I read in the paper where one analyst said that this was the key phrase and that if they did not actually say "extended period", then "all bets would be off" as he put it.  I dunno man, seems to me like they are just stoking the fire for another problem down the road.  Keeping these rates so low for so long is gonna be trouble.  Borrowing money is a bear right now, but there is still some of it being done and think for a second about this: with our rates so low obviously the fixed income market isn't exactly screaming right now, but there are a lot of borrowed dollars being plunked down into markets overseas and really inflating those valuations.  Brazil is a great example of a market that has come back really fast:

http://online.wsj.com/article/SB10001424052748704464704575208532345711208.html?KEYWORDS=brazil

A pretty interesting look at it I think.  I mean borrow in dollars, invest overseas, make a killing and inflate a bubble.  Sure maybe the bubble isn't here per se, but I think that these past few years have shown us that we are really functioning today as part of a global market.  It is all connected in one way or another.  I just think it is worth keeping an eye on.  I am not sure that keeping rates so low here is making that big of a long-term impact, at least in a positive way.

Just my two cents...take it for what it is worth, which probably ain't much.

1 Comments – Post Your Own

#1) On April 30, 2010 at 12:10 PM, russiangambit (29.14) wrote:

I took it as a year or so. So in response I went and bought a bunch of boring dividend paying international stocks.

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