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

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To: GST who wrote (47150)	12/13/2005 11:27:51 AM
From: mishedlo	Read Replies (3) of 110194

It is amazing how after all this time people do not understand my position. YES FOR CHRISTS SAKE THERE HAS BEEN INFLATION. YES IT HAS BEEN UNDERSTATED IN THE CPI. Now is that clear or not? Now to address your statement: Rising housing prices are inflationary NO they are not. They are/were the result of inflationary policy (expansion of money and credit). Why was money and credit expanding rapidly? Because of government spending and interest rates that were overly stimulative as well as loose lending practices. How many damn times do I have to say that I see all of that but am looking ahead to what will happen when housing busts. It is simply amazing and damn annoying that people have not heard a single thing I said, and keep misquoting me and misstating my position. As for oil. Rising oil prices may be happening because of monetary policy or because of peak oil. It is not possible to put percentages on it. If you disagree then please put a percentage on it. I say peak oil is a far bigger factor. Who knows? What we do know, at least I know but no one else seems to understand, that targeting peak oil (or peak anything) by raising interest rates is a huge mistake. We are in this mess because the FED let money supply get out of hand and creditors let credit expnsion get out of hand. Do you disagree with that statement? Basically the difference between my position and everyone else's aside for what I have mentioned above is that I see deflation is coming because I see a huge collapse in credit (and it was that credit that fed these bubbles) and the result of that is doing to be a recession. In fact, credit expansion and consumer debt service has gotten so out of hand we are going to see a deflationary crash perhaps, or perhaps something like what happened in Japan. If rising asset prices are inflation in your book, and everyone else's book here, when those asset prices start to drop like a rock are you going to be talking deflation? I think not. In short, most everyone here is talking out of both sides of their mouth. If anyone was looking to ignore monetary theory it is you not me. I am not ignoring "aspects of inflation that do not support my deflation hypothesis" I am looking ahead to what I think will happen. Mish

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