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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: TimbaBear who wrote (71389)10/8/2006 10:18:08 AM
From: dpl  Read Replies (1) of 110194
 
"If the costs of imports rises, the costs of those at retail won't be able to be lowered no matter how slow business might be."

The whole world has the biggest credit bubble in the history of capitalism.When IT pops the whole world will go though the wringer.Import prices will not rise but fall because "world" prices will fall.If the dollar declines then we will pay more of a lower price.

"If the Fed pumps a lot of money into the economy (out of helicopters, so to speak) more inflation "

If the Fed acts(as it always does) after the credit bubble pops then we still will have deflation.

This is what they did last time a mayor asset bubble popped

1.Nothing.they did not know it happened.Most did not know it happen.
2.Several months later....Nothing.They still did not know anything happened.

3.Months later when it started to hit the econ...they cut rates.

Then

4.Cut rates

5.cut rates ,etc down to 1%

Then after this did no good some clown<g> talked about dropping money from
helicopters.

The key word here is "talked".That is all that happen.Just talk.
By this time two years passed.

Now multiply this several fold and remove the chance that another bigger asset can take RE's place and you can see what will happen.You will get deflation first and then inflation later(maybe).

Will the Fed do something crazy like drop money from the sky.Yes they will.But they will do it AFTER we are already into deflation.

If the Fed pumps BEFORE the bubble pops that is a different story.
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