re: When do interest rates rise

quote:

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If cheap money has led to an asset bubble then why hasn't inflation moved above 3%?

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I don't think you understood my post. I didn't say we are in an asset bubble. I said that asset prices in general seem inflated. Me saying that asset prices seem a little frothy isn't the same as Greenspan saying that the housing market was frothy. If my words could move the market, I would only call the market frothy when there's a full on bubble, too. But I'm not, so I call it like I see it as a market that I view as a bit too expensive for my tastes.

Second, inflation is measured by the Consumer Price Index and Producer Price Index. These indices account for consumption and production costs, not the prices of assets like stocks, bonds, and real estate. Consumption doesn't seem to have increased much, so CPI and PPI won't increase too much either. The average consumer is recovering from a banking crisis that negatively impacted their credit scores, so they'll take a bit longer to recover than most companies and the general stock market.