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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: loantech who wrote (37370)7/31/2005 12:27:56 PM
From: Tommaso  Read Replies (2) of 110194
 
>>>If so then you will be right as the majority is usually if not always wrong.<<<

If the majority of the people in a building inform me that the building is on fire, I will tend to believe them.

Actually I do not think that the majority of the American public thinks that there will be inflation. I think that they believe the Federal Reserve when it says that inflation is "well-contained."

I think Keynes was correct: that governments do things that cause inflation that not one person in a thousand understands.

I think that many contributors to SI are among that one-tenth of one percent of the population who has some understanding of the mechanisms that cause inflation. The "majority" posting here is not representative of the general public.

I think that the statistics published by the Fed about money supply are very misleading because they do not include dollar-denominated deposits outside the United States. But even if you believe the figures for MZM, M2, and M3, what you see is a steady expansion of the money supply--not a contraction that betokens deflation. The deflation of 1929-1933 occurred under a gold standard and a very large contraction in the actual domestic money supply. To predict deflation is to predict such a contraction in the money supply. That kind of contraction does not happen with a fiat monetary system.
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