CB, disinflation, inflation, devaluation and deflation seem to be used in contradiction to each other. My favourite is inflationary deflation. Which apparently means that something can be getting bigger and smaller simultaneously.
I can see those 3D Magic Eye pictures quite easily, but even so, I can't get the 3D image which deflationary inflation or inflationary deflation are supposed to mean.
I don't see how the same average bunch of stuff can be increasing in price and decreasing in price at the same time. It can't.
There isn't inflation and there isn't deflation right now. Prices are steady. Of course there are increases and decreases for separate sections of a currency's home base, such as houses and medical services going up in price while infotech, oil and Made in China drop. But inflation and deflation are overall figures, not separable into their individual components for the purposes of valuing currency stability.
Our great and wonderful leader, Uncle Al, KBE, has done a masterful job for a couple of decades during some really fun times, 1987, 1991, 1994, 1997/98, Y2K and the subsequent great Biotelecosmictechdot.com cascading margin-clearing process.
The mighty US$ has gone up and down a lot over those years and interest rates have gone up and down too. But overall, betting agains the Fed has not been a good idea. I doubt it's a good idea to try now.
So far, what's happened is what I'd expected from mid 1999 onwards, except that the amplitude of the crunch and length of it have been beyond my expectations [especially in the individual case of Globalstar]. Specifically, I thought there had to be a bust to drive out irrational exuberance, get people back to focusing on their jobs, reduce margin levels, and generally get things back to 'normal'.
Uncle Al would, in my theory when the crunch came, race interest rates down and pixelate like crazy to avoid a cascading implosion, letting the whole process take place without systemic collapse. I wasn't sure he'd be able to do it, because there was such high pressure, but it seems that it's going to work as planned.
Which means, as soon as the bottom is in and the danger has passed, that interest rates will be racing up again to avoid a resurgence of irrational exuberance, which is a perpetual human failing. Anyone with a load of debt is living on borrowed time as they'll have to cope with that.
Companies [and individuals] loaded with debt are NOT out of the woods just because they've enjoyed a big interest rate decline for a couple of years. Companies like Microsoft and QUALCOMM, with mountains of money saved, will be watching indebted companies bite the dust and will be able to go shopping for supersonic bargains.
That's my theory,
Mqurice |
