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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: GST who wrote (94193)5/13/2008 9:02:18 PM
From: John Vosilla  Read Replies (2) of 110194
 
'It is ignorance to say that lower asset prices are a harbinger of deflation -- they are not. The reason for this is in plain view -- we finance our lifestyle by borrowing against or by sale of our assets. If our assets are worth less then we will pay more to get others outside the US to hand over their goods in return for our assets. Houses are a measure of our asset values. In the end, the dollar is the ultimate measure of our assets. Assets down, prices up -- that is the inflationary cycle we are in, and it is not at this stage a matter of printing money, although that could throw more fuel on the fire.'

I think you must distinguish between hard assets and financial assets.. One is going up the other down over this cycle if what everyone here is saying is the future.. Acceleration of global monetary expansion by our partners might support the dollar but fuel further inflationary pressures.. Also look at the inflation problem in many countries with strong currencies of late so we can't isolate our problems as just a weak currency and our twin deficits though obviously when the general marches to a certain drum the soldiers do follow.. Housing must start appreciating in a major way on the back side of this bust and long term rates must rise dramatically if this inflation story is for real.It is complicated and though no one knows the answer for sure I bet we are closer to the truth here on this board than most anyplace else.. I find it ironic J6P will only be able to survive loss of purchasing power this coming cycle by owning property yet this phoney credit juiced bubble and now bust has in essence confiscated any potential wealth the masses could accumulate transferring even more wealth to the privileged few..
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