Mish, i don't buy your argument that money growth is close to zero, even you admit that the world is awash in dollars. To me awash is an understatement. If money growth is in low single digits, where is that flood of dollars coming from ?
You admit that credit is expanding 10-20%, doesn't that show you that interest rates at 5% are way,way too low ?
You attribute new liquidity entirely to private sector credit creation, to me things are just too out of whack to accept that.
People are leveraging into bonds at 75 bp below Fed Funds, at levels close to CPI inflation ( below inflation rate IMO ), with dollar tanking, credit going through the roof and stocks and commodities surging higher ? That would be beyond risk taking, beyond foolishness, conventional economic analysis would say that this is financial suicide. ( Of course unless some very powerful entity stands behind you )
Obviously there is no proof that the Fed is monetizing the bond market or playing games with Fannie Mae, only my strong suspicion. What i am saying is that if this indeed is the case then there is no going back, hyperinflation will happen.
You bring up many comparisons to 1929.
IMO "1929" was 6 years ago.
But back in 1929, the US was on the gold standard, so that means the government could not inflate house prices 300% to avoid a Depression ? Or maybe the guys in charge were not smart enough ?
In fact it wasn't until Roosevelt gold confiscation and revaluation that the economy started to climb back.
By the way, why do you call me an "inflationist" ?
I should be called a "deflationist" since i despise inflation and i am rooting for deflation. Greenspan, Bernanke, Kudlow, Mc Culley et al are true inflationists, not me. LOL |
