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

To: russwinter who wrote (4738)	1/10/2004 9:22:43 PM
From: Wyätt Gwyön	Read Replies (2) \| Respond to of 110194

Bernanke would have people believe (that the only inflation indicators to watch are Wal Mart SKUs and US employment c i think that's me, not Bernanke -g- and that asset inflation doesn't matter it certainly matters. one way of looking at it, though, is that asset inflation is unsustainable and assets will crash. what has kept the economy growing but a borrowing consumer? and what has kept the consumer debt growing but unsustainable asset inflation? take away the inflation and there's no growth, just eco-death. such a crash (very well deserved, imo) would cause a slew of BKs among homeowners. given that there's no real income growth in the first place, an asset crash in this highly indebted environment cannot but cause a deflationary depression imo. so again, WMT SKUs and weak income growth, poor workforce participation, yada yada, can all be leading indicators of the coming consumer death spiral. this does not strike me as inflationary, although for other well-documented reasons i expect inflation in energy prices, and eventually food, and perhaps everything else once the entire world economy collapses in 20 years. but that is a ways off.

To: russwinter who wrote (4738)	1/10/2004 10:26:38 PM
From: Crimson Ghost	Read Replies (1) \| Respond to of 110194

The Fed will indeed keep rates low (but low does not necessarily mean 1%) as long as it can. But their ability to do depends on Asian CBs continuing to purchase truckloads of dollars day and night in an endless spiral. If the Asians were to cease and desist or even just reduce the number of truckloads, the dollar would plunge, US inflation and bond yields would skyrocket and Greenspan would be FORCED to hike short rates sharply or risk double-digit inflation and the collapse of the financial system as we know it.