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Pastimes : All Clowns Must Be Destroyed -- Ignore unavailable to you. Want to Upgrade?

To: KyrosL who wrote (36441)	5/30/2000 10:43:00 AM
From: pater tenebrarum	Read Replies (1) \| Respond to of 42523

you're right..i think it depends actually on how quickly the market declines. there are arguments to be made for both inflation and deflation scenarios. the weakening dollar should give inflation a bit of a shot in the arm. i also think the Fed will be fearful to raise rates too much, because it doesn't want the bubble to burst, especially not ahead of an election. what's more, several key commodities are subject to supply constraints, virtually the whole energy complex and the industrial metals(including steel) most prominently. i think other commodities will soon begin to rise in price as well, cocoa and coffee seem to be bottoming, the ag commodities are close to historic lows, and the physical supply situation of silver is deteriorating rapidly. as the dollar weakens, US manufacturers will find it easier to pass their rising input costs on to consumers, as competitive pressures from low-priced imports weaken. that is essentially the inflation argument. the deflation argument centers on a secular trend phenomenon...i do think it will make a comeback once this cyclical inflation upturn is behind us. however, it would require a strong and swift downturn in the stock market and a recession. the main culprit will be the mountain of unrecoverable ponzi debt in the system...the extreme level of private sector debt is probably the strongest argument for deflation down the road.