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

To: Crimson Ghost who wrote (9337)	3/4/2004 2:23:25 PM
From: orkrious	Respond to of 110194

Date: Thu Mar 04 2004 13:31 Trotsky is making a big error. His argument that money creation requires willing borrowers ignores the ability of the Fed to monetize private debt without limit if they choose to -- the "unconventional" measures Bernanke threatened in the fall of 2002. he address this in another post today trotsky (Mike, 11:16) ID#377387: Copyright © 2002 trotsky/Kitco Inc. All rights reserved this was debated here before. there's a major reason why the Fed will imo NOT begin to monetize all defaulting debt once TSHTF: it would thereby destroy the currency it issues, indeed, the entire monetary system would irretrievably break down. in short, it would print ITSELF OUT OF BUSINESS if it did that. therefore, it will likely never happen.

To: Crimson Ghost who wrote (9337)	3/4/2004 2:28:26 PM
From: mishedlo	Read Replies (5) \| Respond to of 110194

In the final analysis sustained deflation is impossible under a fiat money system if the powers that be are REALLY determined to prevent it no matter what. I disagree Unless someone borrows it, it goes nowhere and does nothing. Now, if the FED printed that money, gave it away for the sole purpose of everyone paying off all their debts, we would quickly get to hyperinflation after those debts were wiped out. But, if they just try and get people or companies to borrow more and no one does, or they go deeper in debt as a result of it, it accomplishes nothing. Mish