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 : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Jim Willie CB who wrote (2100)	3/15/2004 2:33:00 PM
From: russwinter	Read Replies (3) \| Respond to of 116555

I can only report the facts as I see them outside the Land of Oz, and try not getting stuck into preconceived notions of things, like some of you may have. <prices are rising everywhere> Yes, by my "simple minded" definition the word for that is "inflation", or "price instability", not dis-inflation, or deflation. <incomes are not.> Incomes in the current environment are not collapsing, they are stagnant. Combined with enormous borrowing power that means they have a highly inflationary effect. <pricing power is totally nonexistent.> I have cited numerous examples (beyond just commodities) that renders this statement incorrect, not factual. The deflation proponents have given me one, bananas, where pricing power is weak. I think Wal Mart Skus are really, really up in the air right now. <stall in residential real estate.> We will cross that road when we come to it, but for now it's just a continuing blown up bubble, that people borrow and fuel rampant inflation with. I think I'm in the right inning, you guys are in extra innings, and the game might end in the ninth. <shortages will lead to defaults and interrupted supply.> Scarcity combined with too much money sloshing around in most economic theories translates into higher prices, not lower. It's called, "chasing too few goods, with too much money" (in this case credit). <half of all industries shut down> = Rationing, inflation, even more shortages, a war time like economy. <what will happen to worker income, spending, pricing power?.> That's how rationing war-time like economies work. Some people just go without. Eventually the market adjusts to some equilibrium if prices are high enough to justify production, if prices are too low, you just get more rationing, inflation, shortages. <that does not point to higher interest rates> Well then look for people to really be able to sustain rationing, shortages, and even more inflation through their borrowing power.