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

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To: gregor who wrote (6501)1/29/2004 9:47:19 PM
From: yard_man  Read Replies (3) of 110194
 
>>Prooving you can have capital spending increases, declining unemployment and DEFLATION !!! God Forbid ! <<

no -- that's a blessing -- but usually we don't speak of deflation in terms of just declining prices. Declining prices with a stable money supply is great -- it means increased standard of living ...

The problem of the kind of deflation which we commonly talk about as a bad thing here -- it's what happens when an economy is clearly tied to ever-increasing asset prices begetting the ability to borrow more to fuel increased or steady economic activity -- when asset prices which underpin such a "flawed system" begin contracting -- there is terrible negative feedback on the way -- it's the whole set of conditions that will wreak havoc -- not just falling prices. I love falling prices and increased capital spending -- we just haven't had a lot of capital spending to get excited about lately.
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