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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: mishedlo who wrote (50538)1/20/2006 7:43:12 PM
From: TimbaBear  Read Replies (1) of 110194
 
A dollar is a dollar is a dollar whether or not it is held in my mattress or overseas.

Is it now? In recent decades there have been several countries who had some sort of peg to the USD for their currency. In order to maintain believability in that peg, they had to have physical dollars backing them up. There are more dollars sloshing around outside the US than possibly can be imagined. Greenspan and Treasury had great times printing them up and I remember reading references of his to the problem of knowing how many was the right amount.

You appear to be looking at current expansion and contraction of money supply as the universe from which inflation or deflation is determined. I wonder how appropriate that is with a global supply of dollars that doesn't lend itself to ready counting?

So, let's see another hypothetical: Suppose credit tightens by...say $20B in a month and the US Government prints $20B....is there any net movement in money supply? Is the situation as stable as it was at the beginning of said month? Suppose this is done in an environment of real net job losses?

Now there is even MORE credit (tied to a housing bubble) but no possible way to pay it back except:.......

You left out at least one: print more money.

Which one is inflationary which one is deflationary and which one is more likely?

Good question when more options are included isn't it?

Timba
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