Question: Greenspan and interest rate

[if it comes from the whitehouse it must be true]

Do you think the admins in washington dread seeing this change and go up?

How long can it stay at its current point?

[Frodo]

1. Until there is some sign of inflation on the horizon.

Rates would have to go up to avoid the possibility of damaging inflation levels. There is currently no sign of that.

In fact, today's release of the Chain Deflator number with the GDP report showed a lower than expected 1.0% (not directly measuring consumer inflation, but a good surrogate).

[if it comes from the whitehouse it must be true]

2. Let me re-phrase

Could it damage the market and put it on a drastic slide?

Thus maybe worrying the bush cronies.

[StClone]

3. Yes that is why they don't raise the rate

What's more that if it were to go up it would mean that there is a demand (over just home building)and they would have to raise rates. As long as it appears they can keep it low they will.

[mulethree]

4. Please spend me

Inflation 3% minus short term interest rates at 1% = real interest rate of negative 2%.

Thats really begging, please please invest in the U.S. As far as I can see, its mostly going to use in inflating property values and the housing markets. About the only growing sector last year.

If you were to take real estate and housing construction out of the picture I think you would see deflation already. Look at the dollar on the currency markets.

The lower dollar inflates the cost of imports, but it's not showing up at the level it should in inflation rates, counteracting the negative domestic deflation and export deflation.

Kinda wish Greenspan would retire so he could write a good book about it in plain english instead of crypto-prophetic.