Silicon Investor (SI) -- The First Internet Community

STOCKTALK

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 : Classic TA Workplace -- Ignore unavailable to you. Want to Upgrade?

To: skinowski who wrote (85885)	11/16/2003 1:53:34 PM
From: SwampDogg	Read Replies (2) \| Respond to of 209892

As it is the weekend... The reason that this inflation strategy will not work in my opinion is that it is extremely unlikely that the inflation will flow through to real wages. If commodities and real things become more expensive company's costs will rise (we are already seeing this) and there will be further losses of employment. There will certainly not be higher wages as people are happy just to have a job that doesn't go to Asia. The debasement of paper currency will therefore be an even bigger disaster than deflation if it is successful. People will earn the same or less but the cost of living will be higher. As far as deflation goes Prechter is bang on. He stresses that deflation is more than just the lack of pricing power. Deflation is debt contraction and the opposite of what we have been seeing for the last generation. The will to borrow and the will to loan has to come to an end at some point. I agree with him that that fact is impossible to stop. You can not cure an alcoholic with more booze. He may feel better but the problem just continues or grows worse. The only way that we can get inflation is if the debt bubble grows larger. We can see from M3 money supply that it is going the other way. How will inflation help elderly people on fixed incomes? how will it effect company pension plans that are mandated to hold bonds? It punishes the responsible and saves the people and companies that were greedy and stupid. My guess is that we start seeing signs over the coming months that dollar debasement is more dangerous than deflation or at least is perceived to be. The natural forces of boom and bust will take hold and this will be seen most in the further rise in unemployment and the collapse of the real estate market. Hyper inflation will come but not until the debt is written down.