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Strategies & Market Trends : Graham and Doddsville -- Value Investing In The New Era
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To: porcupine --''''> who wrote (898)10/15/1998 9:37:00 PM
From: Freedom Fighter   of 1722
 
>>If we want to help our neighbors and ourselves through a rough patch, we should stimulate the growth that lifts the world. <<

This begs an answer to the question "How can flooding the world with more credits stimulate an economy that is slowing because market forces are trying to remove excess credit?"

It is no more than giving a heroin addict another shot to remove withdrawal symptoms. It buys time and stimulates the economy by expanding the excesses. Eventually you run out of bullets, the currency collapses, the credit bubble implodes when people eventually reliquify, or you suck every last drop of blood out of the middle class to prop up the financial system.

That is our biggest problem. There is an almost universal misunderstanding by the mainstream of what is going on.

When the credit levels were low it was easy to prop them up. We are now much more advanced in the process and noone knows if this is the overdose shot yet. Certainly no journalists at the NY Times.

Even if we muddle through this time, we are that much closer to the inevitable and in a much more difficult position to address the problems if we get a competent central banker at the helm next time.
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