My thinking is that P2 was and is characterized by successful FED policy. That is, they intended to lower rates and lower the dollar. In that they succeeded. It supports public confidence that they are succeeding in their goals as well.
In P3 I expect - it will be characterized by a recognition of the failure of the FED. ie. rising rates/ bond crash.
Of course the FED was never supposed to be able to support the entire economy - it was forced on them to try. I expected the lifting would become too much and FED efforts would ultimately fail.
In the first part of a P3 i'm thinking the dollar will be weak as foreigners sell bonds and stocks...raising dollars to be sold into the FX market. Toward the middle and end of P3 I would expect a strong dollar as a result of debt defaults - classic deflation. Just gameplanning it out!
Vega - in reply --
ReplyDeleteMy thinking is that P2 was and is characterized by successful FED policy. That is, they intended to lower rates and lower the dollar. In that they succeeded. It supports public confidence that they are succeeding in their goals as well.
In P3 I expect - it will be characterized by a recognition of the failure of the FED. ie. rising rates/ bond crash.
Of course the FED was never supposed to be able to support the entire economy - it was forced on them to try. I expected the lifting would become too much and FED efforts would ultimately fail.
In the first part of a P3 i'm thinking the dollar will be weak as foreigners sell bonds and stocks...raising dollars to be sold into the FX market. Toward the middle and end of P3 I would expect a strong dollar as a result of debt defaults - classic deflation. Just gameplanning it out!