For the sixth straight month, the Fed did nothing, but we'll take Bill Gross's word for it that this particular instance of nothingness signifies easing just ahead. We can't say we were much surprised by this, having predicted here in January that not only would the Fed start to loosen again, but that it would do so sooner and much more vigorously than anyone appeared to expect. With Helicopter Ben talking incessantly about the supposed 'threat' of 'inflation,' it didn't take a rocket scientist to figure out that inflation was the least of his concerns. Like the rest of us, the Fed chairman has known all along that the 'good' kind of inflation ' the kind that pumps up everybody's assets so that those assets can be hocked to the moon ' is all that stands between our spectacularly overleveraged economy and a Second Great Depression. My advice to permabears is to go with the flow for now, since it is not only the inexorable rise of stocks that you will be fighting, but a bullish stampede in the bond markets as well. No doubt, the hedgies are already gearing up for yet one more blissful avalanche of free money. When you're in the business of borrowing short ('Hello, Japan!') and lending long, nothing could sound sweeter than the tacit promise of a Federal Funds rate about to come down, down, down How far? Well, we speculated here a while back that mortgage rates would have to fall to record lows under four percent to get home buyers and mortgage lenders salivating again. A crucial question is whether loosening can occur fast enough to negate the already considerable drag of the real estate implosion and incipient recession. My strong hunch is that the effort will fail. But because it will
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