Do you think demand for munis will pick up soon, as investors grow disenchanted with stocks?
It might need to drag on longer than that. But, yeah, I think they will get a fresh look. The other event that might get them a fresh look is if the Fed funds rate is lowered and the money-market fund yields started drifting lower, as bank deposit yields already are. Then I think you’ll see some of that money-market money pile into munis. Then, we could have a replay of the early 1990s, when Fed funds was more than cut in half and a lot of money moved out the yield curve, with in fact most of it moving just as Fed funds bottomed. Which is why people are mad at the bond market. Q: Back then, everyone worried over inflation. Now, much of the market talk is about deflation. What’s the greater threat now — inflation or deflation? A: I guess it depends on where you look, actually. In a lot of the world, inflation is a huge threat right now. In most of the [Group of Seven industrialized] countries it hasn’t been, and we don’t look for it to be a big threat. Q: How would deflation affect mun
