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

To: gregor_us who wrote (6174)	1/26/2004 12:33:25 PM
From: yard_man	Respond to of 110194

lp, I think there is a different take on the infl/delf debate. the fed not so much needs to start inflation -- i.e. reflate -- as they do need to keep the current inflation OF FINANCIAL ASSETS going in perpetuity. That commodity prices are rising, indicates that they cannot do it indefinitely. I think it is a no-brainer that consumption demand and housing demand will have to flag here at some pt -- the Fed has turned the housing market into a 'stock market' of sorts. Folks are actually thinking they have an appreciating asset for the rest of their lifetimes in their homes. What the fed will fail at is to keep housing prices inflating. Even when financial assets like houses and stocks start retreating -- commodities and other daily necessities, requireed services ... can still appear to be in very strong uptrend -- relative to those things underpinned by debt. That is not "inflation" per se -- falling prices for financial assets will have a much stronger impact and stifle REAL economic activity. That's what you have to watch for. Inflation -- as in expansion of the money supply, outstanding claims on assets, etc -- is already a fact -- but a rise in a a most general price level which includes housing and capital goods is likely to fall from here, no matter what the Fed does.