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

To: glenn_a who wrote (20119)	10/17/2004 9:22:43 PM
From: mishedlo	Read Replies (3) \| Respond to of 110194

The Nightmare German Inflation usagold.com Am I the only one that thinks that comparisons between the Weimar Republic and current US$ printing are preposterous? Is everyone going to go out now and rush to buy bread, chickens, beef, pork, gasoline, anything? Take a good look at pork. I bought center cut pork chops this week for $1.99/lb A few weeks ago people were screaming about them being over $4.50 a pound. Inflation inflation inflation was the scream. I thought that price was nuts so I did not buy any. Well no one is screaming deflation (not even me) just because the price of pork chops has fallen more than half to $1.99. Nonetheless I was happy to load up AT LOWER prices and am freezing some. If they rise back to $3 next week you can bet your bottom dollar that some inflationists will be talking about the price of pork rising 50% forgetting that it fell 50% first and would need to rise 100% to get back to where it just was. Medical costs are rising. Does that have anything to do with inflation? Someone make the case for me. Pulte just lowered home prices in San Antonio 8-10% on the heals of large discounts in Las Vegas. Where is the mad rush to buy houses before it's to late? Ooops.... Did we already have the mad rush peak back in March? Does the US have war reparations to repay? No Is there any sign of wage inflation? No Is there any pickup in jobs? No Is the stock market action supportive of more consumption? No Are cash out refis supportive of more consumption? No Is the price of oil rising supportive of other consumption? No Is Pulte able to raise prices? No - They are dropping them Are people acting like they did in Germany and hoarding food? No Are people hoarding ANYTHING? No Is there a mad scramble to buy cars? No. People are constantly holding out for better and better and better deals. Are leading economic indicators point up? No. Leading indicators are pointed down. Is the price of corn or beans or wheat rising? No (But I expect them to from these levels given they are down 60% or so) Are furniture sales rising? No Are inventories falling because of excessive excessive demand? No. Inventories are rising substantially. Are lumber prices rising? No. Lumber has fallen off a cliff. That is 15-0 on No's. A perfect skunk. Someone please tell me if this action looks more like Japan or the Weimar Republic. Comparison of the current situation to that era in Germany seems preposterous, at least to me. OK. Oil is rising, and natural gas is rising, and medical expenses are rising, and insuranace of all kinds is rising. But.... Do these take away from other discressionary spending and consumption or not? I think they do and I suggest they suggest lower profits across the board and lower willingness to consume across the board, and the only reason whatsoever we saw this "false inflation" was due to nearly insane record stimulus from cash out refis, falling interest rates, tax cuts, war spending, election spending, business tax credits in an attempt to preempt deflation. I believe the record suggests that all we did was STALL deflation. Lets see how much "Weimar Action" we see in the face of 1) rising interest rates 2) expiring tax credits 3) falling home prices 4) fewer cash out refis 5) more GSE oversight 6) Leading economic indicators falling 7) falling employment - Job losses to China and India 8) jobs gains that are US govt and/or at far less pay We just HAD our crack-up boom. It is all over but the shouting. Deflation is the main threat and no one sees it. Mish

To: glenn_a who wrote (20119)	10/17/2004 10:13:43 PM
From: russwinter	Read Replies (1) \| Respond to of 110194

Yes indeed, thanks. This part I think may describe what could happen or may be beginning to happen(4% yoy money supply growth, see page 13) northerntrust.com in Japan from all the zero interest bank deposits they've allowed to accumulate via their massive currency interventions. Substitute Mark for Yen. For these reasons inflation resumed after the peace until by February 1920 the price level was five times as high as it had been at the armistice. Yet during this same time the amount of currency in circulation had only doubled. Prices were in fact rising much faster than the rate at which money was being printed. Therefore, reasoned the officials, the price inflation could hardly be blamed on the government. Actually, as we shall see, the ebb and flow of confidence can play a big role in the short-term trend of prices. Confidence in the mark had weakened. At the same time, and as a consequence, billions of hoarded marks came out of hiding and entered the marketplace. The accumulated fuel was burning.