Wholesale inflation was up 9.8% year over year in the report Tuesday. People who feel we are close to the bottom don’t consider interest rates.

With recognized inflation running at 6% to 8% or so then that calls for 10%-12% mortgage rates.

Going from 6% fixed to 12% fixed effectively cuts the price of the affordable house in half.

The real pain to the economy will come when the bonds start to sell off.

John