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Strategies & Market Trends : Waiting for the big Kahuna

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To: kas1 who wrote (12649)	1/4/1998 2:56:00 PM
From: Haim R. Branisteanu	Read Replies (1) of 94695

kas, in the most simplistic way, you own a home, the bank gave you 80% of the home value a mortgage, the price of your home is falling the bank reevaluate your mortgage and is in default on lending proceedure, then they ask you to pay up, or call the loan, both action reduce your ability to spend money from your secure job, which in turn lowers other prices which in turn makes your secure job unsecure, etc. That's the desinflationary spiral. To avoid it you inflate the economy - e.g. you print money, as I wrote before, this action results inflation - this fenomen is easy to fight by raising interest rates. BWDIK Haim

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