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

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To: mishedlo who wrote (53686)	2/13/2006 1:08:14 PM
From: russwinter	Read Replies (1) of 110194

One of the aspects to keep in mind in your discussion is mobilization of money. For instance, if you look at the great inflation in Germany in the early 1920's, the CBs printed lots of money, and credit exploded. However initially this didn't have a huge affect on inflation, until suddenly people's behavior really changed. They starting speculating to get rid of cash, and borrowed where possible. That's the term "crack up boom". Actually when the boom got underway, the German CB actually did try to soft land it, and slowed the presses. They actually pointed to how "well they were behaving", but it was too late to stop a major hyperinflation, as money mobilization went haywire. I would also closely watch Japan, because they have massive deposits that could get quickly mobilized. Judging the behaviors we talk about here, some similar trends might be underway today? If so, then the only way to stop it, will be massive liquidity withdrawals. Bernanke's and Greenspan's incremental transparency would totally fail in such a scenario.

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