SI
SI
discoversearch

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor.  We ask that you disable ad blocking while on Silicon Investor in the best interests of our community.  If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.
Strategies & Market Trends : The Residential Real Estate Crash Index
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  
To: neolib who wrote (239590)2/27/2010 11:17:52 AM
From: PerspectiveRead Replies (1) of 306849
 
<if one truly thinks it could go either way, depending on policy tweaks, then why rule out the possibility that it will go neither way? >

I don't think anyone with a decent grasp on economic history would argue that the natural response of the system here would be a strong deflation. That's what happens when the debt can't be serviced. It can't be grown either. Now you've got a bunch of big thinkers that imagine they're going to fine tune an opposing effect to prevent a decline in prices. It's kinda like the difference between throwing a ball to your friend on the other side of the yard on a nice calm day, vs. hurtling down the road in a car at 55MPH and claiming you're going to precisely account for the difference in momentum and land the ball gently in your friends hands. With all the objects in motion, it's far less likely to have a happy ending.

The problem of course is that the Fed doesn't buy things, it buys securities, and it can't possibly force income growth, which is what is truly necessary to get us out of this mess. Without income growth, all the Fed is doing is trying to change the yardstick the outcome is measured with, and make sure the yardstick doesn't shrink to the point that deflationary positive feedback takes over and causes even good debts to go bad. I think we all agree that price instability is bad in either direction, and that's why one must avoid asset bubbles at all cost - because in every example we've ever known, it has resulted in destructive price instability.

`BC
Report TOU ViolationShare This Post
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  

HomeMailHotSubjectMarksPeopleMarksKeepersSettings
Terms Of UseContact UsCopyright/IP PolicyPrivacy PolicyAbout UsFAQAdvertise on SI
© 2025 Knight Sac Media.  Data provided by Twelve Data, Alpha Vantage, and CityFALCON News