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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: ild who wrote (64294)6/21/2006 4:12:42 PM
From: ild  Read Replies (1) of 110194
 
Date: Wed Jun 21 2006 15:40
trotsky (mozel, 14:45) ID#248269:
Copyright © 2002 trotsky/Kitco Inc. All rights reserved
the natural deflation that results from productivity increases as technology advances does not create credit busts. credit busts are the end result of preceding credit booms. the boom-bust cycle is entirely artificial - not a product of the free market, but of government intervention in the market.

Date: Wed Jun 21 2006 15:12
trotsky (Aurum, 13:10) ID#248269:
Copyright © 2002 trotsky/Kitco Inc. All rights reserved
i agree with you that the current rate of price rises is understated in the official statistics, but i'm not so sure that the dollar is destined to decline much against the other fiat currencies, and even if it does, this is not a guarantee that prices will be affected. note that e.g. the Japanese Yen suffered a 50% collapse in its external value between '95 and '98, and yet, prices in Japan kept declining.
it is of course clear that the authorities, and with them practically everybody else in this bubble and debt dependent economy favor inflationary policies. the Fed's 'tough talk' is merely designed to lower inflation EXPECTATIONS in order to pave the way for more inflation.
it is not so clear to me that everybody will get what they want. every single policy implemented in Japan since 1989 was designed to be as inflationary as possible, and yet there was no success. instead of getting what they wanted, they got what they deserved ( for letting the preceding boom get out of hand ) .
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