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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: GST who wrote (49899)1/16/2006 4:34:56 PM
From: mishedlo  Read Replies (2) of 110194
 
What you fail to understand is about a zillion things but here are several of them

1) US consumer debt situation will make deflation here MORE severe than Japan as opposed to your fantasy of preventing it
2) US was once a saving nation and the pendulum WILL swing back the other way
3) Somehow you seem to think lenders will keep lending to homeowners with negative equity or you simply ignore the deflationary consequences of what that means
4) A refusal of banks to lend and people to borrow is coming. That is what happens in deflation.

#1 above is key.
The affects will be a lot worse here too because of it.
We could actually get somewhere except for you 180 degrees backasswardsness on point #1

Let me spell it out for you
ALL OF THAT CONSUMER DEBT IS GOING TO BE WIPED OUT VIA ONE OF THREE WAYS

1) Bankruptcy - deflationary
2) Savings - Deflationary
3) Rising wages

The ONLY inflationary way out of this mess is dramatically rising wages and to that I say fat chance.

Mish
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