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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: Knighty Tin who wrote (9760)3/8/2004 9:24:48 PM
From: mishedlo  Read Replies (1) of 110194
 
KT - I do not propose that food or oil prices will NECESSARILY come down. However when all other buying shuts off..... cars, clothes, computers, TVs, etc etc et
you have enormous deflation.

China can always outbid us on oil and soybeans but on the latter, we can easily block exports if we want (not that I recommend that) corn too. Cattle too. What happens to food prices then? When we are no longer shipping abroad?

Now, that might just prevent us from getting oil or steel or somethuing else we need, unless of course we can get what we need from canada who would probably support us.

At any rate, if we jacked interest rates to 25% would that affect the price of soybeans or cattle? That is where some of this nonsense has gotten. If food prices are rising because of lack of rain in Brazil JUST WTF is a massive interest rate hike going to do about it BESIDES NOTHING?

If food is gonna do what it is gonna do then why the F worry about food vs interest rates. It is useless.

If people do not have money to spend prices will come down. On steel on copper on damn near everything but perhaps food and energy. That is the long and short of it.

IF the US govt GIVES money away in massive amounts for everyone to pay off debts we will see huge inflation. If people keep having to borrow and do not have a job, well at some point the borrowing will stop because at some point the credit will stop REGARDLESS of rates. When it stops prices will crash. Period.

Would you loan someone without a job money at 1%, 2%, 5%, 15%? At some point when the truth sets in that you will NOT be paid off cause the guy you are lending it to will NEVER have a job again, you will not loan it at any LEGAL%.

Credit will tighten and lending standards will tighten whether or not interest rates tighten if credit risk is deemed poor enough.

Mish
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