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Old 23rd Sep 2011, 22:21
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Air Profit
 
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...and another

ROB ARNOTT: We're In The Worst Depression Since The Great Depression
Gus Lubin | Sep. 23, 2011, 7:10 AM | 7,531 | 29
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Rob Arnott says we're in the worst depression since the Great Depression and the Fed may be making things worse.
Arnott, who oversees $80 billion at Research Affiliates, tells King World News:
When real interest rates are 2%-4% and inflation rates are 2%-4% you get a really nice peak where the average P/E ratio is north of 25 times earnings. The interesting thing is both of these numbers are within the control of the Fed, the Fed can control the rate of inflation and tacitly can therefore control the real rate of interest.
Where are we now? We have negative real interest rates. Okay, thatís pretty alarming. We also have inflation rates (if) correctly accounted, itís probably in the 5%-7% range. If inflation kicks up another 1% or 2%...This creates some fairly serious downside risk for equities if the Fed continues on itís current path.
Unfortunately I think they will, unfortunately enabling bad behavior is what they do to try to avoid an economic downturn. Well, the downturn is already here. Absent deficit spending, weíre already mired in the worst depression since the Great Depression.
Read the full interview at KWN >
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Last edited by Air Profit; 24th Sep 2011 at 05:51.
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