It's been exactly five years since publication began at this blog and, if all goes well, this will be the second-to-last post at this location since a new and better self-hosted blog has been taking shape over the last month and, quite frankly, your humble scribe has long since grown tired of double-posting everything.
Rest assured that the name will remain the same, however, the URL is shorter and it is a WordPress blog instead of a Blogger blog. After a few rough patches early on, Blogger has been quite good - very reliable and easy to use - but, after working with WordPress in recent weeks, it has become clear why everyone likes it so much. Anyway, here it is:
![](https://webarchive.library.unt.edu/web/20131106060414im_/http://1.bp.blogspot.com/-THb8zJ7Cxug/T2aZUkZCcgI/AAAAAAAAEkY/XnMqc1Mt6I4/s400/10-03-28_new_mess.jpg)
The new URL is: http://www.timiacono.com and the next (and last) post that you'll see here at this blog will have additional information about RSS, Twitter, and the like, though most of you can probably figure that stuff out on your own.
As for the five year anniversary, the previous item about our old rental house brought back some memories of working a full-time software job, writing the blog, and launching the investment website back in Southern California.
I must say, I'm happy to be out of there, though, I do sometimes miss the weather.
As has become the custom around here on this day, looking back to March 26th, 2005 we find this very first post on a Stephen Roach commentary, one that still rings true today.An appropriate first post - Stephen Roach hits another home run with his latest missive The Test. The last paragraph serves as an excellent premise for this blog:
"It didn’t have to be this way. The big mistake, in my view, came when the Fed condoned the equity bubble in the late 1990s. It has been playing post-bubble defense ever since, fostering an unusually low real interest rate climate that has led to one bubble after another. And that has given rise to the real monster -- the asset-dependent American consumer and a co-dependent global economy that can’t live without excess US consumption. The real test was always the exit strategy."
Yes, it's easy on the way up. Ever increasing liquidity to meet every emerging problem and everyone gets rich - not rich in the old sense, of course, with higher real income and savings, but through higher asset prices for stocks and homes.
"Asset markets around the world are now quivering at just the hint of an unwinding of this house of cards. And they quiver with the real federal funds rate barely above zero. What happens to these markets and to an asset-dependent US economy should the Fed actually complete its nasty task of taking its policy rate into the restrictive zone? "
All aquiver, that's right. Paul Volker must be so proud of his successor ... about to bring down the whole house of cards with quarter point increases to the Fed Funds rate in the low single digits.
"I still don’t think America’s central bank is up to the task at hand. In the face of disruptive markets or growth disappointments, this Fed has repeatedly opted to err on the side of accommodation. I suspect that deep in its heart, the Federal Reserve knows what’s at stake for the US -- and for the world -- if the asset-dependent American consumer were to throw in the towel. "
This is my central belief on this issue, and the motivation for this blog - that given the choice of some economic pain and a long slow death by inflation, the Fed will opt for the latter. It will never be able to raise interest rates like Paul Volker did, in order to put this fiat currency system back on a track that is sustainable for another generation or two - instead, we will continue to swim out to the deep water and hope for the best.
Recall that, at the time, short-term rates had just begun to rise from 1.0 percent in mid-2004 and the housing bubble was entering new and more dangerous phases about every six months. This five-year old commentary seems all the more strange as many people are already talking about short-term rates beginning to rise once again sometime in the next year.
Dan, feel free to comment...
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