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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: russwinter who wrote (4738)1/10/2004 9:22:43 PM
From: Wyätt Gwyön  Read Replies (2) of 110194
 
Bernanke would have people believe (that the only inflation indicators to watch are Wal Mart SKUs and US employment c

i think that's me, not Bernanke -g-

and that asset inflation doesn't matter

it certainly matters. one way of looking at it, though, is that asset inflation is unsustainable and assets will crash. what has kept the economy growing but a borrowing consumer? and what has kept the consumer debt growing but unsustainable asset inflation? take away the inflation and there's no growth, just eco-death.

such a crash (very well deserved, imo) would cause a slew of BKs among homeowners. given that there's no real income growth in the first place, an asset crash in this highly indebted environment cannot but cause a deflationary depression imo. so again, WMT SKUs and weak income growth, poor workforce participation, yada yada, can all be leading indicators of the coming consumer death spiral.

this does not strike me as inflationary, although for other well-documented reasons i expect inflation in energy prices, and eventually food, and perhaps everything else once the entire world economy collapses in 20 years. but that is a ways off.
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