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: mishedlo who wrote (87694)	10/4/2008 11:34:55 AM
From: koan	Read Replies (1) of 116555

Has there ever been hyperinflation EVER in history where housing prices fell? If you can find one, and I doubt it, it will be in a war zone somewhere. The debate is over. I won. We are in deflation. Right here right now. The ONLY debate is how long it lasts. Mish KOAN: I never thought of it as a contest. To me it was always just a very confusing puzzle to try and figured out. If we do end up with a monster deflationary depression, how does the US pay our bills without running up such high deficits we destroy the dollar? And while many of us felt we were looking at a recession/depression a long time ago (I sold all of my base metals stocks almost two years ago); the 64 dollar question always was, in my mind at least, will the recession/depression be accompanied by inflation caused by currency deterioration. You may well end up being right, but not quite yet though, for three primary reasons: 1)inflation is still running above the average for the last 10 years because of high oil prices which persist. 2) The governements of the world will use every trick in the book to avoid deflation based on what happened to Japan. We may see countries throwing trillions to prevent deflation? We just saw 850 billion thrown at deflation. This alone may not knock down the dollar, but throw a few more trillion at the deflation and stack up say a two/three trillion dollar deficit year over year and lets see how well the dollar does?. 3) The US has myriad economic problems which will cause it to continue to need to throw huge amounts of money at, and decreasing revenue streams causing very large deficits. Auto companies going next it looks like and many of us saw this coming pretty clearly a long time ago. But I readily admit I cannot see how this all plays out and I expect there will be many surprises. Cheers,

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