U.S. Inflation

Question on Farmann forum from:
Junior Member

Ble medlem: Nov 2008
Sted: New York
Innlegg: 1
Richard is on a distinguished road
Standard U.S. Inflation

I completely agree with your forecast: “Inflation will soar to double digits in the US and interest rates will follow to double digit levels.” What is your estimated timetable for this period of hyper inflation. There has been so much talk of deflation and the “quantitative easing” activities of the Federal Reserve, i.e. buying long dated securities in the open markets to “force” long term U.S. interest rates down as a mean to stimulate the economy. We have see this just this week with the announcement of the U.S. Fed to buy mortgage securities up to 600 billion. The consequence was that U.S. mortgage rates dropped about 0.68% in one day. This is the so called “quantitative easing” effect of driving long term rates down by entering the market. So my question is ( and I agree with you, that all these actions of the U.S. central bank will proove to be inflationary, if not hyper-inflationary) how do you see this translating into rising rates when most are still looking for long term rates to drop in the U.S. Where do you see the crossover point or inflection point when rates start to rise in the U.S. , first, second, third quarter 2009?….. 2010? sooner? I appreciate your insight.

Kind Regards

Hans Lysglimt answer:

Your question on the timing of this is right on the money.
The question is how long this deflationary initial part of the recession will last, and what happens next.

It will not be in 2009, it will be later. I also believe it will be later than 2010. It will however be fast and dramatic once it happens, so if you see it happening before your should be prepared to enter into your possitions early, you might miss the first leg but identifying relatively early it will be the important thing. You can then ride it for years.

I have argued since November 2007 that this recession will last until 2010 at least and that we might see an improvement towards the Olympics in London 2012.

Now, one year later I am still convinced that this will last:

However, save for a total financial collapse (that I find unlikely) …

Keep reading and participate in the forum.

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