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Strategies & Market Trends : The Residential Real Estate Crash Index

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To: MSI who wrote (3586)7/25/2002 8:26:49 PM
From: Elroy JetsonRead Replies (1) of 306849
 
...unemployment, or drop in income?

Either will do, Deflationary environments bring both. As Kindleberger points out, the extent of the deflationary post-bubble impact on aggregate demand will depend largely on the response by the Federal Reserve and the Federal government.

The Federal Reserve's paper on Japanese deflation indicates their willingness to rapidly expand our money supply to conter-act deflationary pressures - more to the point it explains their actions during the past three years.

Can the Fed maintain stable prices through dramatic inflation of the money supply? Or will their "solution" create and implode bubble after bubble, creating more chaos and destruction than a simple unattended depression? Stay tuned to your media frequencies and find out!
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