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

To: GST who wrote (49899)	1/16/2006 4:34:56 PM
From: mishedlo	Read Replies (2) \| Respond to of 110194

What you fail to understand is about a zillion things but here are several of them 1) US consumer debt situation will make deflation here MORE severe than Japan as opposed to your fantasy of preventing it 2) US was once a saving nation and the pendulum WILL swing back the other way 3) Somehow you seem to think lenders will keep lending to homeowners with negative equity or you simply ignore the deflationary consequences of what that means 4) A refusal of banks to lend and people to borrow is coming. That is what happens in deflation. #1 above is key. The affects will be a lot worse here too because of it. We could actually get somewhere except for you 180 degrees backasswardsness on point #1 Let me spell it out for you ALL OF THAT CONSUMER DEBT IS GOING TO BE WIPED OUT VIA ONE OF THREE WAYS 1) Bankruptcy - deflationary 2) Savings - Deflationary 3) Rising wages The ONLY inflationary way out of this mess is dramatically rising wages and to that I say fat chance. Mish

To: GST who wrote (49899)	1/16/2006 5:00:17 PM
From: jimmg	Read Replies (2) \| Respond to of 110194

What you fail to grasp is that Japan fell into deflation BECAUSE they have a high savings rate and are a major creditor nation. It's likely that the U.S. will increase it's savings rate in the future from zero today. I would argue that it's the rate of change in the savings rate that is more relevant to deflationary/inflationary pressure than the constant rate. In other words a change in the savings rate from from zero to 10% over a given time period is more deflationary than a constant 20%.

To: GST who wrote (49899)	1/17/2006 1:15:30 AM
From: kris b	Read Replies (1) \| Respond to of 110194

What you fail to grasp is that Japan fell into deflation BECAUSE they have a high savings rate and are a major creditor nation" Wrong. Japan fell into deflation because banks were, after the bubble popped, insolvent (their capital base got wiped out )and unable to lend money out. On the other hand population of savers lost their shirts speculating in the stock market and real estate and were too scared to borrow. Lack of willing/able lenders and borrower. Velocity of money collapsed leading to a deflation.