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

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To: Real Man who wrote (39678)	8/25/2005 11:40:57 AM
From: mishedlo	Read Replies (2) of 110194

There is little doubt that real (not BLS) inflation is above 6%. The average oil price increase has been 66% YOY since 2003. That's hardly deflationary. There is plenty of doubt that Inflation is above 6%. People a lot smarter than me would disagree. Rosenberg at Merrill Lynch is one. Lacy Hunt and Bill Gross are two more. Now I would be inclined to believe that it is higher than the 2% indicated (as long as housing does not crash), but therein lies the rub. There is hardly a single person here that does not expect housing to crash and almost all have no clues about how deflationary that is likely to be. As for oil prices... Rising oil prices are very much deflationary as long as wages do not rise to cover the oil rise. It takes discretionary spending out of consumer hands and it is bad for businesses (most of which can not pass the costs on) and will cost jobs in a slowing economy. That said, your belief is typical of most mainstream economists and when was the last time they were as a group right about anything. Mainstream economists have been calling for a bond bust for 3 years running. Most do not see a housing bubble. Most think the economy is strong. If you want to join that collective wisdom, be my guest. as for ... Things are very different now. Derivatives market dominate the trade, old wisdom no longer applies. It's different this time HUH? As for There is only one punishment for unwise currency management. It's called "hyperinflation". We are well on our way. No need to listen to BLS. Just look at CRB. The punishment will be deflation. Inflation will bail out the masses. As for the CRB, it is extremely skewed to energy. Extremely skewed. It is a huge error to look at that and call it inflation when it is related to peak oil not monetary policy. Mish Mish

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