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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: John Vosilla who wrote (82284)6/1/2007 7:56:43 AM
From: Mike Johnston  Read Replies (2) of 110194
 
Did they also tell you to bet against the US consumer and US economy all the way?

I think that US consumer spending will not plunge. Quite the opposite, spending will increase as consumers will soon start moving to liquidate their trillions of savings, bonds, annuities and life insurance policies.
The money might go into stocks, gold, discounted real estate and durable goods.

Later on, they will start spending their paychecks the same day they get it.

As trillions of savings are liquidated, the real production and service economy will tank, living standards will decline sharply and unemployment begins to rise. Purchasing power of the money supply will drop significantly forcing the Fed to add even more liquidity trying to increase this purchasing power by printing more money. This will have the opposite effect as savings that are being liquidated will compete with freshly printed money for scarce goods and resources.

The consumer spending will stop only after a culmination blow off phase, when all the stores will be cleaned out of all the durable goods ( there will be no offers to sell at any price for anything else ) in a final stage of this accelerating inflation.

Better to spend the money now, because in a couple of years your dollars will buy 50% less.
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