Interest rates today
Bernanke's actions last week - failing to taper, yet still trying to maintain the illusion that QE is a good thing - are setting up a one-two punch that's not unlike boxing champion Mohammed Ali's famous "float like a butterfly, sting like a bee" approach.
If you recall, Ali was a master of the combination - some say the best ever. He loved to bring his opponents in close. Ali could see through the duplicity of his opponents' strategy and land punches that won decisively.
Ali did that using combinations that were based in fighting terms on two contrasts: high-low or short-long, or even left and right. He pressed every advantage he could find, even when others thought there were none to be had. Knowing he wanted to go the full 15 rounds, Ali developed a strategy that would become known as the "rope-a-dope" as a means of tiring out his opponents early on, then vanquishing them in later rounds when the fight really began.
I think we should take a page from Ali's playbook and split the "fight" Bernanke's presented us with into two distinct time zones: the current "round," and those that happen down the line. One short. One long.
Is that possible?
Absolutely. What's more, it's easy to do.First, though, put yourself in Bernanke's place...
Fight Club: Is the Home Mortgage Interest Deduction Worth Keeping?
Garrett Baldwin: Don't Just Cut the Mortgage Deduction... Cut All Deductions and Lower Taxes
If home ownership is the American Dream... then why do we need government to subsidize it?
The home mortgage interest deduction (HMID) is a lopsided tool of economic alchemy that favors the rich, and artificially increases housing prices due to the "stimulus" it creates.
According to the Congressional Budget Office, this tax break will "cost the government" more than $1 trillion over the next decade. The HMID mostly benefits households earning $75,000 to $500,000 a year. According to the Tax Policy Center, this range of Americans earns 77% of the tax savings from the HMID.