I have a hard time thinking we would tolerate much more bond rate than 4.0, and only for a few years. Even when opportunistically sticking to devaluation.
The presumption is that, looking through the abyss, we discover that, yes indeed, we pay an unnecessary extra price by failing to mark to market in time. The result is a liquidity scarcity as liquidity is bound to prior contracts. Marking to market now is nothing but good.
Finance knows the tolerance of the tax payer, and finance can simply get the tax payer marked to market, force Congress to upgragrade systems. Modern technology, I guess, technology demands and will get accuracy better than 4.0% for break even.
Should the Fed force the issue?
We are close enough, visibility is OK, but the semantics get fouled. We run a highly risky can kick, and technology can upgrade almost faster than the can veers. Given these issue, the Fed can remain numb, just don't look foolish and get the lecture. Bring it up to the senators, the long term devaluation.
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