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

To: Peter_M who wrote (38155)	8/8/2005 7:53:48 PM
From: mishedlo	Respond to of 110194

For me the big question is: Can I imagine any scenario where the FED would expect a larger wealth transfer then the deflation case. Yes, the big banks would pick up FNM and other credit companies at pennies on the dollar. I think the US is trying to pressure China into doing something similar for the same reason. I look at restrictions the IMF placed on Argentina that caused it to blow up. If I am not mistaken some people picked up some assets on the cheap from that. This entire war in Iraq is transferring taxpayer money to companies like Haliburton. Look at the "bankruptcy reform act" that only addresses alleged abuses by consumers but not companies like Kmart that go under, existing bond holders and stock holders get screwed as well as anyone owed by Kmart, and some small group profits at generally everyone's expense. We allow interest rates at 32% and these FN companies want that 32% and they want no chance of default (via reform) as well. They got it. The entire system right now is totally geared up to transfer wealth to the already wealthy. Hyperinflation would kill it and the dollar at the same time. Do you think the big boys are going to end the game? I think not. That is 100% why hyperinflation will not happen. So the battle then is between inflation and deflation. Inflation can be pulled off only as long as wages go up. Wages are no longer going up and these people can be made debt slaves for the rest of their lives thanks to bankruptcy reform. Eventually however the masses will revolt and take matters into thei own hands (unless of course thay are distracted by continuous war or have lost their rights by a weakening of the constitution). Gee is either of those happening? I could go on but I think you get the idea, given declining wages the best the powers that be can do is to enforce debt slavery and take over assets (like houses) when people are allowed to go under. Mish

To: Peter_M who wrote (38155)	8/8/2005 10:38:03 PM
From: John Vosilla	Respond to of 110194

"For me the big question is: Can I imagine any scenario where the FED would expect a larger wealth transfer then the deflation case." How about create a recession through inflation and much higher rates like 73-74 and 80-81. Then once the leveraged massess default on their ARM's and bubble markets collapse the smart money comes in and take it over in a stagflationary cycle of ever increasing rents, wages and costs which eventually pump up values dramatically like the 1975-1980 period.