Derivatives: Darth Vader's Revenge Message Board

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Non-Tech : Derivatives: Darth Vader's Revenge

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To: kahunabear who wrote (318)	10/4/1998 11:46:00 AM
From: ahhaha	Read Replies (1) of 2794

The only slowing seen so far has been caused by the pulling in from a blasted stock market How can economy slow with FED creating a pile of money? If the money can't go into production, it will either sit idly in banks or go into prices. Sitting in banks solves everyone else's view about the gravity of debt leverage problems. That's not my view. The dollar mask is about to be removed. Halloween is near. Excess capacity as reported has been remarkably constant over the last 20 years. We aren't an industrial inventory economy any more. The only capacity you need to look at is employment. We are at the highest capacity utilization in history. Thus more money causes wage inflation even while more inefficient factories become idled. At the top of inflation in 1980 everyone was worried about inflation after almost two decades of accelerating price increases. This deflation stuff is humorous. At the peak of intrinsic deflation 9/1/98 what are people worried about? It's the flip side of 1/1/80. You can't see it at the top. That's what tops are all about. Don't do like FED and everyone else, fight yesterday's war. Look to the forces creating tomorrow's reality. Japan is a capitalist country. We aren't. Samuelson characterized us as a mixed economy, a little socialism, a little capitalism, and all are happy. I called it mixed up. The threat is inflation. It's easy to get out of deflative forces. You just pump. Eventually the pumping fills the balloon to bursting and then it deflates because of the holes in it. We've squandered 20 years worth of air rushing out. Time to pump her up again. Fear is a strong force. A reduction in lending and FED pumping means excess money laying around. Liquidity trap. We know that when rates get low no one wants to borrow, don't we? They're too fearful to make real estate loans and consumer loans. The people won't borrow because everyone is unemployed. What country are we talking about? When Japan stops dancing around the issue and takes action to create money, the bond will dive big time. The issue isn't their bank indebtedness though most of the world believes that is the problem. It is becoming more of a problem because all those true patriot Japanese are sending their money elsewhere undermining the base upon which the pile of debt sits. This won't happen until the BOJ panics and unilaterally acts by direct infusion. I don't mean interest rate shenanigans. That won't work as they have proved repeatedly. You have to do what our FED is so good at doing.

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