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

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To: ild who wrote (47225)	12/13/2005 4:27:48 PM
From: GST	Read Replies (2) of 110194

We could certainly experience asset deflation -- that is a dimension of poverty in my book. But honestly I am not 100% sure of that. If the Fed decides it cannot "risk" facing reality and decides to aggressively "reflate" then it is possible that we will see a rendering of our economy into two classes -- those who work for a living and do not have home ownership and those who hang on for dear life to hard assets like their house while the dollar turns the finances of the working poor into budget dust. Some would say we are already there. In this scenario, mortgages would all drift towards the completely adjustable end of the scale as foreigners bail out of the market i.e. Bernacke prints money to paper over the lack of US domestic savings and the foreign credit event with a very steep yield curve. Bottom line - dollar is worthless in trade and house prices go to the moon. Possible? Yes. Likely? Don't know.

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