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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: eddieww who wrote (3697)	12/21/2003 1:31:34 AM
From: mishedlo	Respond to of 110194

Show me the ill effects of the drop in money supply to get my attention. It is not enough to simply assert ugly outcomes. Look at Christmas sales. They suck. Look at the FED. When three HAWKS change their tune and go on record supporting the "considerable period" statement when they had previously been calling for hikes, something is up. That was an enormous shift for those guys. Everyome fully expected the FED to remove the "considerable period" statement. They did not. even IF there is inflation, I still win as long as the fed stays accomodating. They have shown no inclanation of wanting to raise rates. If and when they do (big IF IMO), it will be slower than expected or later than expected or both. Like I said, I believe I win whether its inflation or deflation. The only way inflation has a chance is if rates are kept low and the FED is not about to hike and kill housing. Ultimately deflation wins and there is ZERO doubt about that IMO. Just a question of time, and I do not give a rats ass how much money they throw at it. People going bankrupt is ENORMOUSLY deflationary and without jobs that is where this credit bubble ends. Show me jobs and I will accept inflation as a possible outcome. Until you do that, inflation CAN NOT WIN. It really is as simple as that. In the meantime, a rate hike will kill the golden goose. Do you doubt that? If not, Eurodollars are the safest leveraged play there is. Actually I would just assume to NOT be believed on this. With the entire world worried about inflation, I am happy to be in an extremely small camp knowing deflation is guaranteed. In the meantime, with the loose policy, I win either way. M

To: eddieww who wrote (3697)	12/21/2003 8:16:48 AM
From: russwinter	Read Replies (2) \| Respond to of 110194

<Show me the ill effects of the drop in money supply to get my attention.> I believe a substantial chuck of US money supply decline may be "capital flight" (version of the carry trade I described here): siliconinvestor.com going abroad (or returning abroad) in a "giant sucking sound": first manufacturing and labor, and now capital. In effect, it's feeding the USD decline. Picture two ships passing in the night: one filled with recycled dollars from Asian CBs going into port, and buying mispriced longer dated securities, and the other leaving with dollars from short dated securities (mispriced again) seeking a more correctly priced return abroad: in Europe, Australia, or even tangible assets (), etc. It's like reshuffling the deck chairs on the Titanic. That's just another reason why rates need to be increased to defend the USD. It's hard to quantify and it's just my pet theory (and logical), but if anybody runs across commentary that addresses this aspect, please post, because it's not being covered much even by the "bear media". () Example of capital flight: I've been to France twice this year, and gave serious thought to buying a house in one of the incredible Loire Valley towns like Chinon. Just not that expensive (at least it wasn't 15% lower euros ago) and it's heaven there. Passed primarily because I felt I would have suffered from language difficulties, and the French sort of expect you to speak French, not English. The dollars I would have payed would likely have left the US domestic money supply for good.