Ghost of Igloi wrote:
agip,
You made my point again, thank you. The Fed was forced to raise rates to pop the dotcom and housing bubbles. And guess what they are beginning in the near future? Raising rates.
not really - those rate hikes were to fight off inflation, not bubbles. Inflation in the late 90s and 2006 was 4% and climbing - that was the fear.
The fed does not have in its mandate a 'prick bubble' demand
on the other hand, the fed must fight inflation, and that is what it did.
Now...we have 2% inflation - that is why rates have remained so low for so long - managable, pretty much perfect inflation.
So if rates rise in a slow way in a low inflation rate environment...no one will be afraid that rates will rise quickly. Much less scary to business and investors. Most likely the fed will raise rates to 1 or 2% - not the 6% of the 1999 zone.
in other words, rasiing rates from 0 to 2% is not scary. Raising rates from 4% to 6% is quite scary.
so...slighly high valuations, low inflation, low interest rates, a globe growing in unison...whatcha scared of, igloi?