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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: mishedlo who wrote (75259)12/11/2006 12:09:13 PM
From: Mike Johnston  Read Replies (2) of 110194
 
Mish, I appreciate the great effort you have put into this.
Great interview with Mr Kasriel.

I think that the most important sentence from Mr Kasriel's e-mail and interview is this, and it also comes back to the crux of all my arguments about possibility of hyperinflation:

"Short of the Fed depositing newly-created money directly into private sector accounts, I suspect that a deflation would occur under these circumstances. "

The bottom line is this, yes theoretically you are correct, deflation SHOULD happen , but IT WILL NOT, because this time the Fed will go unconventional. ( my suspicion is that this process has already gone under way )

The very minute they start massively monetizing the bond market or buying assets, hyperinflation is "baked in the cake".
And i am quite sure that Mr Kasriel would agree with me on this.
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