Zero Hour

clipped from wallstcheatsheet.com It goes like this…. “As soon as the Fed raises rates, it will pop the Gold bubble and the US$ will bottom” This is totally ridiculous. First, it is real interest rates that matter. Rates need to be 2-3% above the level of inflation. So right now, even if you say inflation is 0% or 1%, rates would need to go up to 2-3%. Secondly, rising rates usually follow the price of gold. It was true in the 1970s and is probably true when you look at the price of Gold in other countries. Rates rise because people don’t trust paper. Rates have to rise high enough for people to abandon hard assets and trust paper again. Based on this factual analysis, the Fed will have to hike rates aggressively. They have never raised rates when unemployment has been rising. Even by their own admission, they won’t raise rates anytime in 2010. And why would they begin to hike aggressively when the economy is approaching zero hour and maintains no real growth of any sort?