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

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To: Knighty Tin who wrote (9342)	3/4/2004 6:50:04 PM
From: patron_anejo_por_favor	Read Replies (2) of 110194

Exactly. The exhausted bagholders stop borrowing and the "money" just sits in Treasury. Treasury auctions come and go and instead of being oversubscribed, get no bidders. Money velocity goes to absolute zero....probably good for gold (in response to general revulsion from debt-supported dollar investments), and maybe pawn shops, dog food manufacturers and bankruptcy lawyers.... This ain't Your Seventies Show. The main difference is demographic. We don't have this huge pent-up aggregate demand caused by a disproportionate population of 15-30 year olds. They're 45-60 now, they're sated with "stuff" and debt...the only direction for demand and monetary velocity is DOWN. And as usual, most have prepared for this epic event in precisely the wrong way (taking on excessive debt, liquidating savings, depleting home equity, and buying ClownStox). And of course the nation as a whole has made the same (or similar) errors.

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