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

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To: re3 who wrote (53358)	2/15/2006 5:35:06 PM
From: Wyätt Gwyön	Read Replies (1) of 110194

What ARE the options given your scenario of "real" inflation @ 5-10 % it is by no means certain that inflation is really 5-10%. certainly wage inflation is nowhere near that level, especially if you look at a moving average of several years. Mish does have some good points--given all the debt in the system, we could have a real crash. if that happen, demand goes away and with it so does pricing power. will that happen? who knows! nobody can predict inflation accurately. there are studies showing that just assuming current inflation will continue at the same level (the so-called "naive assumption") is more accurate than the prognostications of economic experts. the systems are too complex--there are too many inputs with dynamically varying impact coefficients. anything can happen and it probably will. so back to your question--can we say that we REALLY have 5-10% inflation, in some kind of "sustainable" way? i doubt it. i don't think there's a snowball's chance in heck of 10% inflation being sustained over, e.g., the next decade, given dismal wage trends. at some point the consumer keels over and dyes his hair to escape creditors -g-.

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