“Federal Reserve policy makers began to coalesce last month on a strategy to reverse record monetary stimulus by first ending their reinvestment policy and later raising interest rates and selling assets.”
Minutes of the Federal Open Market Committee: April 26-27, 2011 [federalreserve.gov]
Fed Favors Exit Strategy of Raising Rates Before Selling Assets

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Comments from “Plugged-In” Readers

  1. Posted by tipster

    Business is slowing down.
    I can’t see how they raise rates in a slowdown.

  2. Posted by Jimmy (No Longer Bitter)

    I think the keyword in the Fed’s statement is “later.”

  3. Posted by tc_sf

    CR postulates a process that has the first actual rate hikes in 2012-2013
    http://www.calculatedriskblog.com/2011/05/fomc-minutes-exit-strategy-discussion.html

  4. Posted by sparky-b

    so at least several more years of option-ARM awesomeness, nice.

  5. Posted by good bye

    na na na na, na na na naaaa, hey hey goodbye…..

  6. Posted by Mole Man

    Raising rates in a slowdown is problematic, but keeping rates near zero is also causing difficulties. Any real recovery will make raising rates necessary, especially raising them above near zero levels.

  7. Posted by polip

    nonsense
    bad headline, editor (misleading).
    it will be a long time until the fed raises rates (2012-13 at the earliest).
    to combat inflation? really?
    core is still

  8. Posted by R

    I thought we were supposed to be worried about deflation? Now we’re supposed to be worried about inflation? It’s getting difficult to keep track of what I’m supposed to be worried about.
    http://www.socketsite.com/archives/2010/11/do_you_really_think_so.html

  9. Posted by eddy

    @R, that’s how FUD works.

  10. Posted by tc_sf

    Not sure where the FUD is here.
    There was a large deflation risk, which in general is much worse then inflation, the Fed took action on an unprecedented scale to avoid this. So far this action appears to have been generally successful, now they are attempting to unwind this action without causing excess inflation. They may or may not be successful in this endeavor.
    They were between a rock and a hard place, avoided the rock and are now seeking to escape the hard place.

  11. Posted by eddy

    There is FUD everywhere. Especially when there is a micro focus on one specific issue, such as interest rates, deflation, or inflation. There are many many interacting, global economic variables that it is hard to make accurate predictions. And anyone claiming to be an expert is usually not one. People have to make their own, best informed, decisions based on their life situations. I just sent a “tip” to the Ed. regarding an Apple from 2006 showing a nice gain, over asking, over prior sale price comp that sort of bucks the trend in a major way. A lot of people were saying this was the top of the market (i.e., 2006). So beware of FUD and make good informed decisions.

  12. Posted by Po Hill Jeff

    Doesn’t the editor normally select apples before we know whether they went up or down?

  13. Posted by diemos

    don’t keep us in suspense eddy, what’s the address?

  14. Posted by tipster
  15. Posted by A.T.

    I think it’s this place on Russian Hill ($450,000 in 2005, $270,000 yesterday – down 40%):
    http://www.redfin.com/CA/San-Francisco/1925-Leavenworth-St-94133/unit-3/home/1208215
    There will always be exceptions to the trend. But that does not change the trend.

  16. Posted by [anon.ed]

    You’re the one posting wild exceptions all the time, using percentages to talk about dollar amounts to make it seem even more egregious constantly. Not Eddy.

  17. Posted by anon

    Holy LinkedIn, batman.

  18. Posted by Jimmy (No Longer Bitter)

    Anyone get the feeling that Linkedin in 2011 is sort of like Netscape in 1996?
    Seems to me that we’re about to go on a wild ride — its bubble time again!

  19. Posted by A.T.

    fluj, lighten up. It was a joke, although the big 6-year price drop was real. And nobody can understand what you’re trying to say anyway (using percentages to talk about dollar amounts? Huh?).

  20. Posted by [anon.ed]

    Plenty light over here. I know you’re funny style, all the way. Did you and fluj ever speak to one another on here or something? Because you do just looooove to say fluj all the time. I’m actually [anon.ed].
    Funny joke that Tipster already made and you bit. And real big difference between that stale bit and your other points where you say the exact same, Redfin scouring for condo loss things, while being totally serious. But yeah, you ARE funny. And as far as percentages are concerned, you know, individual cases with relatively small dollar amounts can look even more egregious when percentages get thrown around. That’s just IMO. But even 50K would have been over 10 percent in that case.

  21. Posted by A.T.

    OK, now I get your point about percentages. Yes, a $50,000 loss on a $200,000 buy would be a bigger percentage drop than a $50,000 loss on a million dollar buy. We all understand that, I think. But I provided both the actual dollars lost ($180,000 – ouch) and the percentage drop (40% – ouch), so I still don’t follow your confusion.

  22. Posted by [anon.ed]

    “confusion” now? Yep. Totally confused over here. You’re serving up a steady stream of “scour Redfin for condo loss” rocket science daily and it’s real difficult to follow. Whatever.

  23. Posted by A.T.

    The LinkedIn leap is pretty awesome. But d*mn their bankers screwed up in pricing this and put a lot of money into the quick buyers’ hands rather than the insiders’! If this price holds through the lockup period, there will be more money to spread around inside. 400 more of these and it will be 1999 all over again.

  24. Posted by tipster

    The bankers knew exactly what they were doing. This is a show for the public.
    The banksters stand to reap hundreds of millions from other IPOs based on the reputation of this one and you can bet they are all buying this thing right now like crazy to try to ignite another bubble. Idiots will start buying tomorrow.

  25. Posted by tc_sf

    ” Especially when there is a micro focus on one specific issue, such as interest rates, deflation, or inflation.”
    Given that inflation reflects a change in the value of money and that nearly everyone in this country either has, owes, gets paid in or buys goods with money it is plain to see that inflation is quite macro.
    I’m not suggesting that people should try to beat the market’s estimate of inflation, but simply ignoring it does not seem like a particularly good strategy. Especially since I don’t think that total inflation over the 7-10 year time frame of a typically tenancy has even been zero. Not to say that it’s impossible going forward, but ignoring something that his historically always occurred is very different from ignoring something which occurs rarely. Plus the people suggesting inflation be ignored may have an agenda as well.

  26. Posted by Eddy

    And anyone claiming to be an expert is usually not one. ……. So beware of FUD and make good informed decisions.
    Seems like a relevant comment to restate.
    Maybe my tip will be the Friday feature. :)

  27. Posted by tc_sf

    It perhaps also bears restating that assuming inflation is zero by ignoring it is implicitly a decision. One should also beware of those advocating this implicit decision.
    One need not be a medical expert to cast a jaundiced eye on those who disbelieve common knowledge about vaccination or cry FUD at the fiendish fluoridators!

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