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

To: NOW who wrote (9496)3/5/2004 5:18:02 PM
From: russwinter  Read Replies (1) | Respond to of 110194
 
<how is rising consumer credit inflationary?>

Puts excessive and above equilibrium (outpaces personal income and salaries by about 1/2 trillion plus a year, or 5% of GDP) spending power and demand into people's pockets, which in turn fuels the global Train Wreck. The monetary loop or mechanism for this inflation surge is the BOJ, BOC, and the Fed. For explanation of the TW, see:
financialsense.com



To: NOW who wrote (9496)3/5/2004 5:27:40 PM
From: Raymond Duray  Respond to of 110194
 
Re: how is rising consumer credit inflationary?

The classical description of inflation is too much money chasing too few goods.

Rising consumer credit is a way of increasing the money supply which in turn stimulates the economy, but at the cost of inducing price inflation.

Without the stimulus that excessively low interest rates have provided, the bubble in residential housing prices we've witnessed since 2001 would not have occurred.


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