SI
SI
discoversearch

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor.  We ask that you disable ad blocking while on Silicon Investor in the best interests of our community.  If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.
Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  
To: TimbaBear who wrote (71316)10/7/2006 10:35:04 PM
From: dpl  Read Replies (2) of 110194
 
I don't want to get into yet another inflation/deflation debate but a credit bubble is very basic.

Creating(inflating) a credit bubble is inflationary.After all you are creating huge amounts of credit.This credit has to bid the price of something up.If an asset is part of the bubble then most of the "inflation" goes into the price of that and less into the CPI.

Destroying(deflating) a credit bubble is deflationary.You are destroying vast amounts of credit.If an asset is part of the bubble then it takes most of the hit in prices.If an asset feeds a lot of the credit into the general econ, like RE does,then you will get a lot of deflation in the CPI also.
WHEN the RE bubble pops, and unless something weird happens to keep the credit bubble inflating, you will get CPI deflation very quickly.The retail side will be forced sell things below cost.
Report TOU ViolationShare This Post
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  

HomeMailHotSubjectMarksPeopleMarksKeepersSettings
Terms Of UseContact UsCopyright/IP PolicyPrivacy PolicyAbout UsFAQAdvertise on SI
© 2026 Knight Sac Media.  Data provided by Twelve Data, Alpha Vantage, and CityFALCON News