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Politics : Welcome to Slider's Dugout
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To: Nihontochicken who wrote (6331)9/25/2007 3:50:56 PM
From: Nihontochicken  Read Replies (1) of 50538
 
As I mentioned previously, the big question fro me is whether the coming end to the credit/fiat bubble will be inflationary (perhaps followed by a deflationary collapse), or deflationary from the start. The following Minyanville article votes for a deflationary ending (but doesn't address a possible significant inflationary prelude). Article describes the difference between expanding fiat and expanding credit in the author's opinion:

minyanville.com

Excerpts:

"A rapid expansion of money supply tends to lead to outcomes as seen in the Weimar Republic or Zimbabwe, but a rapid expanse of credit is what we saw prior to the Great Depression."

"The carry trade in Japan has also significantly distorted the world's economy. When will that unwind? The answer is no one really knows for sure. When it does bust, the impact will be stunning in significance and it likely won't be good for stock prices."

"I certainly thought this credit bubble would have ended by now. When it does happen, it will hit businesses like a brick wall. Many signs suggest the credit bubble is now popping but we have been down this path before only to have some other aspect keep the bubble inflating. No one can put a date on it, but what we do know is that credit bubbles end in deflation."

FWIW.

NC
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