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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory

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To: russwinter who wrote (5548)	1/20/2004 11:50:01 AM
From: ild	Read Replies (1) of 110194

From Heinz: yes, the crack-up boom in China is the main driver of commodities prices here. and you're right, in spite of that, there is no 'price' inflation (and now, even the US money supply has begun to contract sharply), because industrial overcapacities mean there's no pricing power, and thus the rising input costs merely squeeze margins (which is in essence deflationary). my guess: commodities are going to stop going up when China has its '1929' - the bust that is almost certain to follow on the heels of this recent credit expansion boom. when? i think it'll happen this year. the global 'reflation' initiated by exessive money printing will come to a screeching halt sometime this year - and i bet that deflation is going to make headlines again as well. it's an unhealthy echo-boom...the structural damage to the US economy due to the ministrations of fiscal and monetary policy to date is enormous. note, the authorities have no more breathing space - there's no ammunition left to 'counter' the coming bust. it's gonna be a doozy.

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