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Strategies & Market Trends : Classic TA Workplace
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To: elliottrules who wrote (100373)7/1/2004 1:30:09 PM
From: dpl  Read Replies (2) of 209892
 
I don't believe that the inflation/deflation wave(as I call it) has a fixed size.It's size can be influenced by major things like world wars or crazy central banks.They can increase the size but not eliminate the long wave.

The important thing is that the wave comes in sections and to identify what section you are in.For instance 1980 was the end of the "inflation" section of the wave.We are now in the platau area of the wave.

Let me use an analogy.
You walk along a flat plain and gradually the slope increases until you are now going up a hill.It gets steeper and steeper.This is the inflation(cpi) side of the wave.
At the top of the hill you find a platau.This marks the end of the secular rise in interest rates.You now have a secular bull in bonds.This next section is the asset part of the wave.Even though CPI inflation now declines you still have huge inflation because money is still being created as interest rates fall.The inflation is in assets.Usually stock or RE.
At the end of the platau there is a cliff.A straight drop.This is the deflation section of the wave.If you take one step too much(the asset bubble bursts) you fall into deflation.At this point nothing,not even a hundred central banks, can stop deflation.
What we have now is Greenie doing everything he can to stop us from taking the last step(keeping the RE bubble going at any cost)

David
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