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

To: mishedlo who wrote (29154)	5/2/2005 1:18:27 PM
From: Elroy Jetson	Respond to of 116555

Keep in mind that, for "monetary stimulus" to 'work', large amounts of new debt must be created. In our current situation where demand is declining, due to the excessive growth of debt relative to incomes, "monetary stimulus" is an attempt to fix the problems of excessive debt with more debt. No matter what perspective you approach it from, this makes the problem worse after a short-lived heroin rush. To inflate debt away the Fed will have to start buying large amounts of debt in order to monetize it. You can't inflate debt away with new debt creation, only through monetization. .