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Strategies & Market Trends : Mish's Global Economic Trend Analysis
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To: mishedlo who wrote (72434)12/17/2007 11:29:55 AM
From: Steve Lokness  Read Replies (1) of 116555
 
Mish;

Deflation is about contraction in debt and asset prices

Yup, I understand this as you define it and accept this definition. But where do commodity prices fit in? Wheat, Oats, Sugar are way up and now .....to my surprise.......even lumber has come way off its bottom.

If you use asset prices (and debt) in your definition of deflation, don't you also then have to use expansion in debt and rising housing asset prices in the inflation index? Since the only significant asset to many many people are their homes - they have then experienced huge inflationary numbers the past few years. If my home has gone up 300% in a couple of years, what does it mean if it falls 2%?

As to "contraction of debt", does that also apply to the federal governments debt? Seems to me that if we bail out homeowners with cash that is charged on the governments credit card, that that would be a expansion of debt?

Trying to get my mind around what is coming next - and as always respect your opinion.

steve
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