MishMan, you are employing too much aggregate thinking
you make a lot of sense
but home heating expenses are rising, a sign of inflation
copper pipes for home plumbing are rising
soybean prices for farmers are rising to feed livestock
we have enormous selective price increases
try to get away from the aggregate thinking
sure, plenty of colossal oversupply pressures, which will continue to exert heavy forces to reduce prices in many areas
you subscribe (it seems to me) to the longterm oversupply deflationary picture
fine, so do I
Russ subscribes (it seems to me) to the nearterm monetary and credit inflationary picture
fine, so do I
the USGovt is not gonna stand by idly and allow a supercycle deflationary collapse
they will pump up the volume on every monetary stereo system that is with earshot of spenders and investors
that has worked in the past
and they are too fuching stupid to detect a paradigm shift that tells them this time their approach will fail
OR ELSE, THEY ARE TOO SCARED TO ADMIT THE SHIFT, AND REALIZE IT WILL FAIL, BUT THEY HAVE NO ALTERNATIVES WITHIN GRASP
I believe the USGovt and Fed will continue until price inflation shows up
they must
they see no alternative
they will engineer a nearterm price inflationary episode
it will solve nothing
it will wreak huge damage
then the macro deflationary forces will take over
I predict price inflation will be quite evident by late 2004 and all thru 2005
but the supercycle will snuff that new trend out by 2007 and 2008
we will see the bond bear starting sometime in 2004
it will go away and end in 2007 or so
then we will again see a massive bond rally again
but that will take the USEconomy squarely into the unremitting jaws of the dreaded Liquidity Trap
just like Japan
and our bank system, tied too closely to Fanny Mae, will suffer horrible damage
just like Japan
just my thoughts
you guys are both right
I have had a similar battle with you on rates, MishMan
I give in to you on longterm
I stand my ground on nearterm
with such powerful inflationary forces at work since early 2001, officials will eventually succeed
they have to, since they are trying so hard
if they sense their efforts are not working, they will up the pressures even more
official efforts will come up against more powerful supercycle forces
and the USEconomy will ultimately collapse into the Liquidity Trap
/ jim |
