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

To: Earlie who wrote (35687)	8/22/2005 3:46:48 PM
From: Crimson Ghost	Read Replies (2) \| Respond to of 116555

Selling panics or selling climaxes usually occur towards the END of bear markets.

To: Earlie who wrote (35687)	8/22/2005 6:31:32 PM
From: valueminded	Read Replies (2) \| Respond to of 116555

Earlie: Agreed and good points, however..... The problem is that the things that have gone down in price form far less % of personal and small business budgets then those things that have gone up. For example, you mention manufactured items & electronics. Well they have gone down in price however on the business front, our liability insurance, taxes, medical insurance, shipping and legal expenses have gone up far more then those have gone down. My point is the items which are decreasing in price are small potatoes compared to those increasing in price. A final point is that the dollar will come to a resting place somewhere. The issue is do you believe that the dollar is currently fairly valued or undervalued ? If so, then deflation makes sense. But in my case, I think we have had too much easy money for too long which has created a scenario in which the world is flooded (imo) with dollars. I expect that in the end when we look at what a dollar is worth, it will be valued at less tomorrow then it is today. All that said, I wouldn't be surprised to see a bout of stagflation before the dollar gets realigned.

To: Earlie who wrote (35687)	8/22/2005 7:37:01 PM
From: Perspective	Read Replies (4) \| Respond to of 116555

I think the whole "flation" debate is overrated. Let's be specific, here. Most of us are worried about individual asset pricing, not the "general" level of prices. What most want to know is what will happen to the prices of: 1. houses 2. stocks 3. oil 4. gold 5. other commodities 6. manufactured goods 7. bonds 8. services In global terms, prices for #1,2, and 6 will fall hard regardless of actions to attempt to increase debt levels further. Prices of #3, 4, and 5 will be relatively stronger, but when the recession sets in, they will fall as well. Prices for #8 will likely continue to rise as the cost of insurance and pensions are no longer lessened by the financial market levitation of the past few years. And whether the coming debt contraction does it, or just the constant flow of dollars pumped into financial markets by the Fed does it, the demand for bonds is likely to remain firm, keeping interest rates low. I challenge anyone to argue with the fact that interest rates are at historic lows despite unprecedented real estate inflation, commodity inflation, and services inflation. If the inflation of the past five years hasn't demonstrated the disconnect between the real world and bond pricing, I don't know what will. Interest rates don't respond to present inflation any more than gold prices do - which isn't much at all. People that argue otherwise are just ignoring the reality. Since the gold price high, the purchasing power of the dollar has eroded steadily, yet gold and commodities in general witnessed a decades-long bear. BC