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Strategies & Market Trends : Strictly: Drilling II
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To: lh56 who wrote (4018)11/15/2001 12:11:29 PM
From: isopatch  Read Replies (2) of 36161
 
Price wars breaking out everywhere. Oil just one example.

Falling prices on THIS scale, across the spectrum of the global economy, is classic symptom of LT deflationary cycle. The Fed can pump all it wants, but velocity of money has cratered so the effect isn't inflationary as was the case during the 70s when people spent as fast as possible chasing rising prices. Now they hoard even fiat confetti dollars<g> because:

1. They see prices keep going LOWER. and

2. They want a big cash hoard due to fear of losing their jobs!

This feeds the vicious circle patter that deflations always follow.

Expect admittedly controversial Iso-thesis about LT multi-year deflation cycle 1st posted here nearly 6 weeks ago to settle in VERY slowly amongst the majority of the financial community as well as with ordinary investors. Let's wait till after this victory celebration rally ends and watch the numbers.

People are very ST oriented in their market views. But sometimes it pays to stand back and look at the very big LT picture. And IMO that's Deflation for the years ahead.

Global economy as well as the US both contracting rapidly. Nice ST pop in retail sales and probably some other curve balls in eco stats for a month or two will promote the kind of wishful thinking we're already hearing from those who claim "the bottom" is in. IMO, that expectation is going to be proven wrong as we get into next year.

Bear Market rallies can be big and very seductive. And we're seeing that already.

But hey, WTFDIK<lol> All any of us can offer is our opinion. Admittedly, mine is VERY contrarian.<g>

Best regards,

Iso
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