When fixed-income investors conclude that the central bank isn't going to raise rates any time soon, ... there tends to be a convergence of rates.

The average American's real income and consumption is the highest it's ever been.

The bigger bubble is actually in the financing of homes. Mortgage lenders have loosened their lending standards. Rather than telling a lot of would-be buyers, particularly in places like California, that they don't qualify, they're coming up with all sorts of so-called innovative alternative financing.

It's been clear that the Fed concluded rates were too low,

I think the folks at the Fed would like to raise the federal funds rate as high as they can short of seriously depressing economic growth. They want to make sure they have plenty of room to ease next time they have to do so.

For two years, we've seen this tremendous increase in prices, yet the core inflation rate has stayed at 2.3 percent or less, and the only explanation for that is globalization means inflation is contained.