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Strategies & Market Trends : Booms, Busts, and Recoveries -- Ignore unavailable to you. Want to Upgrade?

To: energyplay who wrote (55282)	11/1/2004 4:44:18 AM
From: Elroy Jetson	Read Replies (1) \| Respond to of 74559

Indeed. It is precisely this asset bubble (capital gains) / credit bubble (loans against capital gains) which the Fed hopes is their salvation. In simple terms, the Fed hopes to solve a problem of excessive debt - by pushing additional debt into the economy. When we describe the situation in this uncomplicated format, even a small child can spot the inherent problem. Personal income does not include capital gains for a very important reason. While Capital Gains can be used as collateral for new debt, only Personal Income can be used to make payment on that debt. Those who think otherwise do not understand the situation as clearly as economists do. home.pacbell.net The magic of Monetarism as leverage is applied to the economy has been described as a "virtuous cycle" which does great mischief to the meaning of virtue and equally dishonest turns of phrase. History show this virtuous period has ALWAYS been followed by a period of de-leveraging, frequently called economic depressions. This can happen suddenly in a panic, or in the new Monetarist world of managed economics this takes the form of the grinding decades of suppressed economic activity which Japan is experiencing. .