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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: russwinter who wrote (5759)1/22/2004 11:03:31 AM
From: Wyätt Gwyön  Read Replies (2) of 110194
 
sorry if my post was not too clear--i cut my finger and am having trouble typing. so i will keep it brief: my argument is that the US consumer is at the end of the rope in terms of expanding debt. as you know, debt must expand if income doesn't expand, in order to grow PCE. since income is not growing, and demand will be hurt by inflation, it seems to me there could be a severe demand contraction in the US at some point, which will reverberate throughout the Asian supply chain in a manner that is deflationary vis-a-vis commodities and intermediates.

Should the FED just ignore important price stability issues?

i guess their argument is that they look at the core PCE deflator, which is on the brink of deflation. stability does not seem like an issue if you ignore the crudes and the intermediates. that's their argument and they're sticking to it!

as for "should" the fed do this or that--well, that's a normative issue. i'm not God and i'm not playing Monopoly and i'm not writing a history book, so i don't think normative discussions are constructive--who cares what they SHOULD do. i only care about what they WILL do, and what the repercussions of such will be.
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