*(I share his email to me) well done Pieter, we have the line drawn now!
Michael Darda of MKM Partners had some interesting comments today on CNBC.
He says, correctly so IMO, that the Fed SHOULD continue to raise rates here. (Angell says so too.) That does NOT mean that's what they'll do.
The reasoning behind Darda's comments are basic Econ 101.
We've just had a supply shock (think supply curve shifting left).
As it is, this will raise the price level, and has. (Inflationary in
layman's terms.)
If we add liquidity here, creating MORE demand than already exists, we would monetize that effect. Not only has the supply curve shifted left, but demand for resource would
increase, straining markets further. Prices would escalate further.
This was the lesson from the 1970s; we'll see if its been learned or if
politics and Bush relations generate a different result.
The decision ... the first in quite awhile not on automatic pilot ... will roil the PM sector one way or the other. Mark the date of the Sept meeting.
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