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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: forceOfHabit who wrote (71673)10/11/2006 6:24:38 PM
From: mishedlo  Read Replies (3) of 110194
 
No need to flame away.
And I understand your basic scenario.
The answer is simple and I have stated it many times.

1) The Fed and the Govt will NOT bail out the little guy at their own expense.
2) Hyperinflation ends the game. The Fed knows that. It will not attempt it because it would destroy US banks as well as their own power.
3) The Fed can not create jobs (Congress MIGHT attempt it) or they might not. The Fed does not have to go along and/or would be forced to raise interest rates if they did. That will kill a lot of people.
4) Take a look at the Bankruptcy reform act of 2005. It intends to make people debt slaves forever, not bail them out with jobs.
5) Global wage arbitrage
6) While it may be true that some retirees sitting comfortably in huge cash positions would benefit from deflation, those with wealth primarily tied up in real estate sure would not. Nor would those tied up with wealth in the stock market. Very very few would actually benefit. Those few are the extremely wealthy. The Masses NEED inflation but DESERVE deflation (because of reckless spending). How often does the market give people what they desperately need?
7) Comparisons to Weimar are absurd

Mish
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