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Strategies & Market Trends : Mish's Global Economic Trend Analysis
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To: rubed who wrote (8586)7/1/2004 3:33:26 PM
From: dpl  Read Replies (1) of 116555
 
What could happen is we get the worst of both worlds.Huge asset deflation and CPI inflation at the same time.

Perhaps this.The RE bubble bursts and we get a very sharp/deflationary downturn probably the worst post WW II.Prices of assets and CP! drop sharply.

After the recovery of this the Fed must print trillions.It feeds into the CPI but asset bubbles never reflate.

The Fed also has a bigger problem than this.We need trillions
for the baby bommers to retire.SS and Medicare are hugely underfunded and 80% of fixed pension plans are too.If we have a downturn this would grow.Most BB's have the rest of their money in two other assets Stocks and RE the very assets that will deflate.

David
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