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

To: FrozenZ who wrote (19344)	10/3/2004 7:01:48 PM
From: mishedlo	Read Replies (2) \| Respond to of 110194

What about the debt of Europe? Japan? What about the demographic time bombs in both of thos places that is worse than here? What about the difference between forced war reparations with no conceivable way to pay them back other than by printing as opposed to the US living extremely beyond its means but with a potential (not necessarily a liklihood) of reversing course. Debt levels are insane everywhere with no way to pay them back. Eventually that debt will be worthless thru bankruptcies not by inflating it away. To inflate it away is to say that greenspan won. That Greensoan defeated K-Winter. That everyone taking cashout refis to buy cars and bigger houses than they can afford, that all this excess credit bubble will be hyperinflated awwy is tantamount to saying we should 100% leverage ourselves in debt right now, because we can pay it back with worthless US$ tomorrow. Sorry I do not buy it. Eventually creditors (big banks) will tire of lending or counsumers will tire of borrowing or the govt cuts back money supply right after the election or whatever and this huge mass of credit expansion a) crashes immediately in a huge deflationary housing bust b) slowly deflates over time just like Japan I am betting on b) but either will do it. Once that debt has been wiped off, and once China no longer needs the US consumer then and only then do we have a chance at a sustained inflation outbreak. That will occur at a time of China choosing, not ours IMO. That time is at least a few years away. Mish

To: FrozenZ who wrote (19344)	10/5/2004 9:50:31 AM
From: dara	Respond to of 110194

The Weimar Republic had huge debts which could only be met with inflated currency. ... So are you predicting hyperinflation which could include the housing market much further? I think the Weimar Republic introduced rent control so that when everything else was getting more expensive landlords could not afford to rent their properties as the rent did not cover maintenance costs. Properties were put up for sale but there were few buyers. Foreigners were buying blocks of properties which created ill-will. Towards the end of the inflationary period (1925-26) the interest rates were around 5 or 6%. The government started reducing the rates at that time. A little different from the current situation. FWIW