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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory

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To: piggington who wrote (31148)	4/25/2005 5:45:40 PM
From: Elroy Jetson	Read Replies (1) of 110194

Japan provides an example of how the government can become a lender of last resort when normal lending falls off. Japan also demonstrates that these Monetarist welfare programs will ultimately fail to prevent de-leveraging and deflation. Like American banks in the 1930s, Japanese banks would not issue mortgages for rates below 3.25% - even though their cost of funds was essentially zero. Acting on the deranged advice of Monetarists at our Federal Reserve and their own Monetarist economists • • • Japan created a government agency called "The Home Lending Corporation" which lent newly-issued money direct to home owners at fixed rates as low as 2%. Japan was thus able to misdirect trillions of dollars into uneconomic over-investment in real estate - yet was unable to prevent deflation in real estate values. home.pacbell.net .

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