5 replies to this topic

[nimblebear]

Since world markets are running so strong, I'm a little curious as to why more countries aren't raising their rates. An awlful lot of liquidity is sloshing around.

http://chart.bigchar...&mocktick=1.png

Edited by nimblebear, 22 April 2007 - 12:43 PM.

[fib_1618]

...why more countries aren't raising their rates...an awful lot of liquidity is sloshing around

One idea would be that high productivity levels are absorbing any inflationary tendencies produced by this same excess liquidity. Another idea would be being asleep behind the wheel from those who are responsible for such economic policies. There are several other possible reasons that come to mind.

Then again, who says that many other countries aren't already raising rates and we just don't know or hear about it?

It would make a good fundamental research project for anyone who may be up for it.

Fib

[relax]

Plenty of countries are raising rates, but more importantly a lot of these countries aren't hysteric about inflation like the US

Their main focus is on the growth aspect of the economy

Something which the US probably should have focused on, instead of focusing whether inflation is 2,6 or 3,1 per cent - many inflationary pressures can't even be controlled with the interest rates, so no point trying to

...why more countries aren't raising their rates...an awful lot of liquidity is sloshing around

One idea would be that high productivity levels are absorbing any inflationary tendencies produced by this same excess liquidity. Another idea would be being asleep behind the wheel from those who are responsible for such economic policies. There are several other possible reasons that come to mind.

Then again, who says that many other countries aren't already raising rates and we just don't know or hear about it?

It would make a good fundamental research project for anyone who may be up for it.

Fib

[Tor]

I perosnally think there is a loadof BS talked about "liquidity". I am open to be proven wrong. Look at interest rates back in 2001-02, what effect did so called "liquidity" have then? Neit. So what is it then? Beats me.

[fib_1618]

Look at interest rates back in 2001-02, what effect did so called "liquidity" have then?

Well, the price of precious metals started higher...and then commodities...and this eventually found its way into stocks as a "tsunami" in early 2003.

General rule: it takes about 18 months to 2 years before monetary policy changes are felt by the equity markets....it's never instantaneous.

Fib

[SandStorm]

I perosnally think there is a loadof BS talked about "liquidity". I am open to be proven wrong.

Look at interest rates back in 2001-02, what effect did so called "liquidity" have then? Neit.

So what is it then? Beats me.

I think the difference is that the "bottle neck," the financial intermediaries, are much more willing to lend today than back then when people are losing money left and right.

As soon as cracks starting to appear in more places -- more economic slowing and market correction -- I suspect liquidity drawn from debt will dissappear quickly, very much like what is currently happening to subprime. Of coure, the Fed will always come to our rescue, but we should remember the Fed is only the lender of the last resort, not the intermediaries who can truly make a difference.