Mish's Global Economic Trend Analysis Message Board

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Strategies & Market Trends : Mish's Global Economic Trend Analysis

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To: valueminded who wrote (6581)	5/18/2004 10:48:13 AM
From: mishedlo	Read Replies (3) of 116555

Deflation will only be possible if we get a FED (ie if Voelker was in now) that decides interest rates are too low. Disagree strongly and Japan proved it. People out of work with no credit will not be able to buy and prices of assets will fall. People are living off of home refis, praying for a job turn-around. If that does not come, and the credit spigots turned off, it is all over even at .5% interest rates. Commodities are soaring primarily because of huge demand in China. That demand has little to do with interest rates in the US IMO. Already this economy is pushing on a string and even slightly higher interest rates may, and probably will do it in. If you belive that housing will tank on relatively small hikes, then you believe in deflation but you just do not know it yet. Look at all the jobs assoicated directly and indirectly with housing. What do you think happens if those jobs are gone? Inflationary? Hardly. Deflationary bust. Mish

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