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Strategies & Market Trends : Mish's Global Economic Trend Analysis
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To: Tommaso who wrote (24098)2/22/2005 2:37:13 PM
From: mishedlo  Read Replies (1) of 116555
 
Mish is still looking for deflation. I just don't think serious deflation is likely with a fiat currency, though the Japanese have certainly done the best they could in that direction, and if Americans suddenly developed a Japanese unwillingness to spend on consumer goods, we could make ourselves have a deflation. For Americans, that would be somewhat like trying to commit suicide by holding their breath.

Consumers have been spending their houses and to a lesser extent recent stock gains.

What happens when they can no longer spend their houses and stocks start to fall to boot? Rememeber they are already having a hard time servicing the debt they already have.

Throw in some job losses due to a housing slump and there quite literally is no way to avoid deflation.

BTW - it is not just willingness to spend but willingness to spend and willingness to lend. That's what it takes to keep housing going. When it busts all it takes is for one of the two to be shut off. I suspect we see some of each.

Mish
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