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Pastimes : The Naked Truth - Big Kahuna a Myth
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To: per strandberg who wrote (79320)12/13/1999 11:48:00 AM
From: pater tenebrarum  Read Replies (2) of 86076
 
i believe i can answer that one...repo's have a fixed term, after which they are retracted. however, knowing easy Al, they will likely be replaced in good time. no way is this Fed prepared to 'take away the punch bowl'. they have now completely dismissed traditional economic theory in favor of a liquidity and credit splurge the likes of which have never been seen before. what will stop the train? that's simple. since the Fed will do nothing to disturb the party, it will stop all by itself when credit creation reaches a natural limit. with corporate and household leverage at post-depression highs, that point can't be too far off. what happens thereafter? possibly a systemic collapse....something along the lines of the Japanese post 80's experience. much of the credit will never be repaid...
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