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

To: orkrious who wrote (7843)	2/12/2004 1:12:54 PM
From: ild	Read Replies (1) \| Respond to of 110194

Date: Thu Feb 12 2004 12:48 trotsky (Kapex, 9:43) ID#377387: Copyright © 2002 trotsky/Kitco Inc. All rights reserved as i've told you before, the so-called 'mistake' of the Fed in the 1930's is a complete figment of the imagination - they not only cut rates from 6.5% all the way to zero, they increased free bank reserves by over 400% between late '29 and early '33 - in short, they did everything that Greenspan is doing NOW and then some. the CRB chart does NOT prove the inflationist case - it's merely a function of the current crack-up boom in China, coupled with the fact that no significant investment in natural resources has taken place over the past two decades. in the US, over 30% of all industrial resources are currently IDLE - with alleged "GDP growth" of over 8% and over 4% respectively in qu. 3 and q.4. it is this output gap that is behind the gathering deflationary storm, and the crack-up boom in China actually serves to worsen the GLOBAL output gap considerably ( because it's a capital overinvestment boom ) . your mistake is in believing that the monetary authorities ar omnipotent ( 'not allowed to happen...' ) - that's erroneous. both the strong bond market and the recent plunge in US money supply ( the biggest decline in 6 decades ) show that there is no reason to worry about inflation, but rather its opposite. 'deflation can't happen' is, as Prechter has correctly pointed out, the broadest consensus in the entire economic and financial forecasting scene - but in terms of the US money supply it is HAPPENING ALREADY. the falling dollar meanwhile exports deflation to all the major trading partners of the US. an interesting sidebar in this context is that one of the historically most inflationary currencies in the world, the South African Rand, is currently experiencing a multi-decade low in inflation...the speed at which inflation has collapsed to virtually nothing there has been utterly breath-taking. my ( informed ) guess is that the true reflation phase won't begin before the mid-2010s - and then it will take another 15 to 20 years before actual INFLATION becomes a concern again ( in the K-summer phase ) . Japan's Mississipi bubble like monetization of US treasury debt will imo also in the end contribute to the debt liquidation cycle that is ahead - attempts to conjure prosperity out of nothing end in repudiation in a deflationary era.