With the Consumer Price Index for October due out this Thursday, every investor and economist in bozo-dom is anxiously awaiting the latest shot-to-be-heard-'round-the-world. How utterly ridiculous that we should continue to obsess each month over whether the price of a dozen eggs, or a gallon of gas, has risen by a few pennies when there is a $10 Trillion deflationary juggernaut bearing down on us in the housing sector! Years ago, in the 1990s, when this silly obsession over an alleged 'threat' of inflation reached a cyclical crescendo, then-Fed Governor Lyle Gramley asserted very publicly that the Fed was almost certain to tighten -- if not at its next meeting, then at the one to follow. I asserted otherwise in this newsletter, and I will do so again now. Let me say it loud and clear: Listen up, you simple idiots: There is about as much chance of the Fed moving back into tightening mode right now as there is of a Martian invasion. Surely the eggheads and think-tank geniuses who are always fretting in public over the prospect of credit tightening must see what has been going on in the residential real estate market? Just last month it was reported that the average value of a home in the U.S. had declined by 9.7%. What this means ' explicitly ' is that every home 'owner' in America with a mortgage is now shouldering an effective real-interest-rate burden of more than 15 percent. Oh, sure, the eggheads will argue, what does the average mortgage debtor know about real, as opposed to nominal, interest rates? Not much, I would admit ' at least not in the academic sense. But you can be certain Joe Sixpack senses that the wealth effect he felt when home values were wafting blithely higher as recently
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