No. of Recommendations: 3
Splotto:

(Can't copy again—does anyone else have this problem on occasion?)

The issue with mortgage backed securities is: what if the deflation hypothesis is wrong? As Paul says, there are reasons to think it won't happen. In that case, low mortgage rates will not last and mortgage funds will be hit by interest rate NAV plummets.

Some of us see some very dangerous structural flaws in the economy. We can also see larger and larger deficits on the horizon (I saw earlier that Bill Frisch is pushing the tax cuts as paying for themselves with growth, despite his hand picked CBO saying that's nonsense), and that puts pressure on interest rates, even if in a depression other factors could keep them down.

I still think it is too dangerous to make decisions based on credible analyses about deflation (analyses that are a lot more credible than those the administration and congressional supportors use to hype their tax cut wet dreams).
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