The Epic American Credit and Bond Bubble Laboratory Message Board

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

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To: bond_bubble who wrote (50750)	1/22/2006 1:30:12 PM
From: russwinter	Read Replies (5) of 110194

<after the current credit bust, no more money is going to come from ABS, MBS, hedge funds!! Of course there will be some other source but that will not match the ABS+MBS+Hedgies!! Hence the deflation. If you can find a replacement that is larger than these -- you can expect the inflation to continue.> You need to make a distinction here. When the credit revulsion occurs in the ABS+MBS=hedgies leveraged plays, capital will blow out of those, and the value of those securities will go to money heaven. If the hedgies are leveraged into commodities those price will blow up as well. So you could see capital and fictitious values destroyed. If the monetary authorities try to print money to buy those distressed securities, it may end up going into new unexpected places, and not at all where they want it. Like goods or just plain cash? The truth is that liquidity, the only significant weapon remaining in the central bank's arsenal as decision making moves to the markets, will not necessarily go where you want it to go when you need it to go there." --Martin Meyer in "The Fed"

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