Mish's Global Economic Trend Analysis Message Board

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Strategies & Market Trends : Mish's Global Economic Trend Analysis

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To: RealMuLan who wrote (29094)	5/1/2005 12:27:10 PM
From: THE ANT	Read Replies (3) of 116555

I think Greenspan and the Federal Reserve know we are heading for deflation.If they had let go back in 2000 and not dropped rates so quickly it would have happened then.They were afraid of an overshoot to the downside and aggresively eased.They know raising rates will bring us back to deflation but likely feel they have done what they can(preparing their buddies and others better than they were in 2000)As they raise rates the battle lines draw nearer to a war they know they will lose.They know they must raise but only to the tipping point, then make their retreat.I do not think they realized what distortions they would cause(what a joke- a capitalist system which can no longer allocate resources any better than a controlled economy as prices have become so distorted we live in a haze).But march into battle they must!The question they must be asking themselves is whether avoiding the loses of an overshoot to the downside was worth the loses from capital misallocation.I can tell them the answer is no.Even in their denial this realization must be coming to them.In the meantime the rumble of hoof beats can be heard and the rising dust can be seen in the distance.The clash is coming.I for one am scared

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