Monday, October 19, 2009

Fed Rate Hikes, No Way

There has been a lot of talk about the Federal Reserve needing to hike rates back to prevent inflation due to the printing presses for the US dollar being in full swing for 10 months now. Thank gosh for Anil Kashyap from the University of Chicago Business School.

Just when we thought that all intelligent thought was lost in higher education, we got to hear from Professor Kashyap this morning on CNBC. When asked about the Barron's Headline: "It's time to raise the rates, Ben" (Article can be found at: the Professor said: "I don't know who's economy they're looking at, but it's not ours. There is a zero percent chance that the Feds raise the rate and it wouldn't make any sense to do so right now."

When asked, "Why should they stay at zero for long?" He responded: "Because the economy is still depressed and there are no inflationary pressures." When asked, "Why not just do a small increase like 2% or even 1%?" The good Professor responded: "They can do that when the time comes. But why would you want to signal to everyone that you see something that isn't apparent to anyone else? It's not in your mandate and it would just be crazy."

Thank gosh for rational, realistic people who don't need to get reelected that can speak to the public honestly. If you didn't get to see this interview on Squawk on the Street live this morning at about 10:15, you can probably check back with later today for the video. Until then, you'll have to take our word on it. Especially because this confirms what we wrote about the DOW being back below 6500 with what is now only 73 days left...just doesn't look realistic.

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