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Strategies & Market Trends : Heinz Blasnik- Views You Can Use
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To: ild who wrote (2147)6/6/2003 12:24:44 PM
From: Perspective  Read Replies (2) of 4904
 
My question to Roach:

I've been an avid reader of yours for years now. I agree completely on the debt-load thesis; it will suppress economic activity going forward. However, you seem to advocate easy money by the global authorities as the fix on some days, and on other days, you point out that it may not help. (I agree that it won't help - in real terms.)

What I would really like to see are some thoughts on

1. What the results of a "successful" reflation would look like and

2. What asset classes you think would perform best if the Fed succeeds.

It seems to me that money is nothing more than an accounting mechanism for future claims on global supplies. What I believe the monetary authorities are doing, and you condoning, amounts to pushing the "reset" button, wiping the slate clean, and eliminating debts (and creditors like me). Is this a way to recover from our debt-driven deflationary dynamic, and how should a creditor like me respond?

(I personally think it spells disaster, as the creditors of the world figure out what is happening and remove their assets from the financial system. If leveraged debtors are getting a bailout through a removal of the memory from the accounting system, then creditors, by definition, are losing out. There are no free lunches and creditors know this.)

BC
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