It’s interesting that since the weekend there’s been several commentators and opinion pieces stating why the Fed should not lower interest rates. Of course, the main object of the media’s attention now is the Maestro – Alan Greenspan.
Greenspan can deny and distort the facts all he wants, but the truth is the only deflation that occurred under his watch was falling prices on personal technology products. Escalating real estate was hidden as a calculation of the rental value of property (owner’s equivalent rent), rather than being marked to market value.
As today’s Wall Street Journal editorial (“The Fed’s Alibi”) states: “The job of a central bank is price stability. The Reagan-Paul Volker policy mix was tight money combined with tax cutting, which reversed the 1970s’ mix of easy money and tax increases. Washington is in danger of drifting back, almost unconsciously, to that 1970s’ policy.” (Bolded emphasis mine.)
As I have stated in previous posts*, Saturn in Virgo (2007-2010) brings the return of higher inflation similar to its previous transit in the late 1970s to early 1980s. Pluto’s transit of Sagittarius (1995-2008) is what brought globalization to the forefront as a major economic force, as Sagittarius rules all things foreign. Jupiter has transited Sagittarius (its “home” sign) since last Thanksgiving Day until December 18, 2007. This has created the peaking euphoria over investing in emerging markets. Jupiter, the largest gas giant in our solar system, inflates what it touches. What was once cheap is now not so cheap after all.
Alan Greenspan says he does most of his thinking in the bathtub. It seems that he couldn’t see the housing and stockmarket bubbles because his glasses were smeared from bubble bath.
* Related Posts in the Commentary or Predictions section: “Time to Clean Up: Saturn in Virgo (8/28/07); “Deflated Supply, Inflated Price” (8/24/07)