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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum
GLD 374.33+0.7%Nov 18 4:00 PM EST
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To: TobagoJack who wrote (50216)5/19/2009 9:42:40 PM
From: THE ANT1 Recommendation  Read Replies (3) of 217860
 
"U.S. Needs More Inflation to Speed Recovery, Say Mankiw, Rogoff "
Boy do they have it wrong!Over the last 20 years assets inflated as interest rates were too low.There was inflation in everything we owned and steady prices in what we consumed.This new inflation will be in everything we consume and will kill asset prices.At most it will keep assets from going down to where they should have gone and will boom prices in what we consume, especially if the dollar goes down.Inflation of 10% with 30 year mortgage of 10% may = zero real rates but will still crush housing as people will not have the cash flow to make the payment.These guys are idiots.Minskys "stability breeds instability" and the Feds low interest policy turned a prexisting Asset/Wage ratio of lets say 1:1 too 2:1.This happens every 80 years.We are now in a situation like the fall of the Soviet Union.They opened the door just enough to let in a little light, their lies were exposed and the whole rotten structure crumbled.People know that debt can not stay at the level it is and thus the Asset/Wage ratio must return to 1:1.Inflation will not help Asset prices relative to wage prices.I agree with Elroy.The best way to destroy debt is pay it down and or wipe it out.This will allow a higher Wage/Asset ratio than the inflationary route
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