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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: Nadine Carroll who wrote (90346)	3/18/2001 8:52:34 PM
From: Mike M2	Read Replies (3) \| Respond to of 132070

Nadine, Jim has an interesting series on inflation/deflation stagflation financialsense.com Jim Davidson's The Great Reckoning Ch. 11-13 is a good read on deflation. Davidson makes the point that hyperinflation in highly developed nations is rare because the cost of destroying the bond market exceeds the benefit whereas banana republics have little to lose - see Weimar Germany. The Fed can increase the banking sectors ability to create loans but if people are unwilling or unable to take loans the Fed ends up pushing on a string. Now the GSEs have bought much of the home mortgages and in the future perhaps the Fed or GSE will buy more private debt in an effort to monetize it. The inevitable decline of the US dollar will drive up the cost of imports but a global slowdown will offset this impact to some extent. I expect all efforts to prolong the bubble to end in failure and deflation to overpower attempts at reflation. mike