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Strategies & Market Trends : Mish's Global Economic Trend Analysis
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To: mishedlo who wrote (13483)10/18/2004 1:52:55 PM
From: mishedlo  Read Replies (3) of 116555
 
Email Reply From Heinz on my Minyanville post.

Hi Mike,

thanks & very good - i fully agree of course. my only doubts concern one point - namely that the 1.75% FF rate means rates have been normalized. i'm inclined to believe they're already way ahead of the curve, i.e. too tight.
as an aside, i'm convinced the housing/mortgage credit bubble is teetering on the brink right here and now. the collapse should finally begin, accelerate in '05, and stand in full bloom in '06. the signs are unmistakable.
the deflationists have ecome lone voices - which raises my confidence that they will be correct.
btw., even the most eloquent inflationists who present the most cogent and convincing arguments (e.g. Saville, Bugos) trip over the issue of the housing boom. for their theory to be consistent they can't admit that this boom will end and result in falling prices. it's their achilles heel.
btw., Japanese land prices have declined the 13th year in a row, by 5.2%
- lower than the 5.6% decline of the previous year. whip out a calculator and check what 5.5% price declines compounded over 13 years mean. it's a truly breath-taking collapse. in '89 it was conventional wisdom that land prices in Japan would NEVER decline, due to the 'shortage of land'.

regards,

hb

PS: the inflationistas obviously don't see that rising commodity prices are ultimately deflationary in a deflationary era. imo the rise in the crude oil price will hasten the arrival of DEflation, not inflation.
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