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

To: croesus1111 who wrote (25763)	2/2/2005 5:53:17 PM
From: NOW	Read Replies (1) \| Respond to of 110194

when do these folks realize just how far down the river they have been sold without a paddle and in a leaky boat?

To: croesus1111 who wrote (25763)	2/2/2005 7:09:29 PM
From: russwinter	Read Replies (2) \| Respond to of 110194

<So the currency inflates while the economy contracts, ala Argentina?> Yes, that's the model, but that was an inflationary experience despite 80% of the population living in abject poverty. The "strength" of demand in the economy has nothing to do with it. Demand for Dollars does. Once people are reluctant to accept them in payment (as is evidenced more and more abroad) then you have an inflationary problem. The answer to an inflationary vs deflationary outcome to massive debt Bubbles lies with the printing press, to print or not to print.

To: croesus1111 who wrote (25763)	2/3/2005 12:24:17 PM
From: John Vosilla	Respond to of 110194

Seems to me that the the inflated money is all going to Bully. But at least a third of the population does not have any inflating assets (houses or stocks) and does not have any cash at the margin. Their real wages are growing at less than the inflation rate. So there could be a growing failure of debt repayment even as the currency inflates. With the weakness of labor in the labor-management game, these people have no ability to get higher wages in the face of inflation, the way people did in the '70's and early '80's. A lot of these folks seem to be right on the edge now. A bit of inflation in their bills, or a few more lost jobs could send an increasing number of them over the edge. How many would have to default on credit card, rent, or other payments before we have a debt repayment failure leading to deflation? Simultaneously, the Fed continues to print money, but it won't bail out the thirty percent who don't get any of it. So the currency inflates while the economy contracts, ala Argentina? We seem to be in a serious economic decline already in many midwest markets where no one gets bailed out be inflated housing and overall spending levels and job creation are tame. On the other hand you have the money falling out of parachutes thinking in the bubble coastal markets where cash out refis and high paying jobs in housing related industries keep things humming for now. I wonder if the 30% not being bailed out in LA feel better than the 100% of folks not being bailed out in Akron? Perhaps when we have a currency crisis and sharply rising long term interest rates that will finally bring down the housing bubble then we can have an Argentina type scenario play out here on a national level.