Mish's Global Economic Trend Analysis Message Board

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Strategies & Market Trends : Mish's Global Economic Trend Analysis

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To: koan who wrote (78200)	4/22/2008 11:42:36 PM
From: John McCarthy	Read Replies (1) of 116555

Hi I did not mean to side-track the conversation with my opening remarks - but was bending over backwards to "make sure" we didn't get into this fact vs that fact ... LOL now to my point .... your conversation is THE conversation .... if you go back and read Mish's response to your deflation thingie ... his LAST LINE was words to the effect ... "he may not be able to reflate" (or something to that effect) that got my attention .... before continuing lets dumb it down for me ... and NOT use Mish's defintions (I hate to read - like Mozart had "too many notes" (Amadeus) - Mish has too many words) and just over-simpfy .... (a) Inflation - to much money supply. Acceleration ... (b) Deflation - to little money supply. Contraction ..... Sure - its wrong - but on the upside its easy to read. Note - lets IGNORE defining what the words money supply represent. Well - if I is at a point where I got too little a money suppy .... just jack it up - makes sense to me ..... however thats done .... Now this is where the story turns - and goes in a different direction than posts we might read on some of those gold boards .... i.e. those old stories about Ben the hello_copter and throwing money out the window .. (I think) Mish is intimating that once the money supply begins to CONTRACT you cannot stop on a dime and accelerate it .. free money or not .... yes - I know (I KNOW) - sounds counter-intuitive ... i.e. give me a free million bucks and I will generate a whole bunch of demand for products ... But there is that real live experiment called Japan ... and they were in a deflationary spirial for an eternity ... and still are? One gottcha though ..... (I think) Japan - on balance are a people of savers We ain't. So maybe we can't fall into the same hole. i.e. our unabasched spenddyness would force a huge increase in demand for goods and services ... and a goose to the multiplier effect ... well - I'm lost in the forest - but thats not important. regards, John

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