Foreclosure and REO Properties Expert Advice

TULLY’S   NEWS:  Current Inflation Rate 2007
 
Inflation’s  Out of  Sight!!
  
Today, the federal government released its figures for wholesale inflation.  It showed the largest monthly increase in 34 years.

The actual rate was 3.2% for the month. If you were to annualize that,  it would put inflation running at over  38% for a year.  

(OUCH!!!) 

The good news is that one month does not a year make,  thus our annual rate of inflation is probably alot lower than the 38% number. 

What the number does tell us, though, is that inflation is starting to come back into play in our economy. The implications are far reaching from rising prices for the  goods and services that we buy  to the ability of the Federal Reserve to lower interest rates.
 
As was written yesterday, the Federal Reserve is embarking on a campaign to reinflate the US  economy.  Today’s  number could put a cramp into the  Fed’s  game plan.  As inflation rises, investors that buy US  treasuries start to demand a higher rate of interest on loans to the US government because inflation erodes or curtails  their rate of return and their buying power. 

Each time interest rates are lowered, more pressure is put on inflation and also weakens
the US  dollar.  The Fed’s  mandate from Congress is to preserve the value of the US  dollar.

So, here comes the “double-whammy”: as interest rates go down, investors of longer term US treasury bonds demand a higher return in the form of higher interest rates,  and as the dollar weakens, the cost of imported goods goes up in dollar terms. 

So, the  FED’s  ability to lower rates and potentially stimulate the economy are now starting to come under pressure.  With that thought, I do not believe that the  Fed  will lower rates a whole lot more. 
 
Until tomorrow!!!

- Tully

** Tully Alford is a member of the Virtuosity Unlimited, LLC team of expert advisors.  Virtuosity Unlimited, LLC which operates with a team of advisors to help those in distressed properties with “strategic solutions” to restructuring their loans or exiting without eminent foreclosure.  If you are a lending institution in need of expert workout specialists, distressed homeowner, or an investor looking for below market value real estate, contact us today at 866-439-4877.