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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: Tommaso who wrote (33195)5/25/2005 10:53:27 PM
From: mishedlo  Read Replies (1) of 110194
 
"Fearful holders of suspect long-term debt far from expiration [i.e. long bonds] could dump their notes and bonds on the market, making prices collapse [i. e. prices of those bonds]. If this were to happen, the net result of an attempt at inflating would be a system-wide reduction in purchasing power of dollar-denominated debt, in other words, a drop in the dollar value of total credit extended, which is deflation." (130)

I agree that is a confusing statement at best but the more I read it the more it just seems blatantly wrong as opposed to confusing.

Let me focus on this piece
"the net result of an attempt at inflating would be a system-wide reduction in purchasing power of dollar-denominated debt ... which is deflation"

That is blatantly stupid.
Now my position is that attempts at reflation will ultimately fail, but that does not seem to be what he is saying at all.

In fact a reduction in the purchasing power of dollars (why is he saying purchasing power of debt anyway?), would likely be inflationary.

As I said, at best it is some convoluted concoction containing multiple ideas in a single sentence, none of them explained properly. At worst it is blatant nonsense.

Mish
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