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

To: TimbaBear who wrote (50212)	1/19/2006 11:24:37 AM
From: westpacific	Read Replies (1) \| Respond to of 110194

When the K wave deflation kicks in - fast and rapid. We are in the defend it stage and that most likely will continue this year, I have at least tell May. Maybe longer. But when it starts it all goes down the toilet. Patience. West

To: TimbaBear who wrote (50212)	1/19/2006 1:06:35 PM
From: mishedlo	Read Replies (3) \| Respond to of 110194

Gold Gold is a deflation Play I thought commodities went down in a deflation? Isn't that the theory: lower wages mean folks can't consume therefore the prices of goods and services must fall? Commodities are part of "goods". If you don't have the demand for the goods, then you don't have the demand for that of which they are comprised. Or will you now ask what goods are made from gold? To sidestep that, lets take a look at the other commodities as see if they would have been as good a hedge against your deflation: copper, coal, iron, cement, platinum, etc. Commodities go up in deflation, huh? Mmmmmm, must brush of the Austrian school economic books I suppose, that wasn't the way I learned it. Where did I say commodities went up in deflation? I said gold did. Gold acts like money. It did extremely well in the great depression as did mining companies. Commodities may or may not fall. Oil for example is subject to peak oil. If we ran out, oil prices would go up deflation or not. Other commodities like copper and steel will fall IMO. Grains will be totally dependent on weather related issues IMO. What's that you say? The deflation is about to come, but not here yet? Well, why not, we haven't had a real rise in wages in 5 years, ergo, deflation right? I'm razzing you a bit because you keep going out on some pretty thin branches to defend your position and it sometimes looks like you are doing it in spite of the facts. We don't make the market do what we want, we try to be dispassionate in trying to read what it is telling us. You really are making a complete nonsensical strawman of my position. No rise in real wages does not mean deflation. Deflation is a collapse in money supply and credit. What happened in Japan was a collapse in credit for 60 straight months at a rate far greater than any increase in money supply. Thus, it is possible to have deflation and an increase in money supply if credit contraction happens at a greater pace. Gold is going up against the major currencies. It is easy to brush it off as a mania, and that would be fine if that is what it is. But suppose, it is not yet a mania? Central banks are increasing their holdings of gold (see Australia, Russia, China). Those central banks that are doing so have less price movement of gold vis-a-vis their currency than the ones that don't. These are clues, just like the pulse is a clue to the condition of one's heart. It begs the question: "In which currencies does gold seem to be moving the most?" and then: "Why those currencies or that one currency?" Where have I called gold going up a mania? People keep throwing out silly strawmen all the time and it is getting to be ridiculously time consuming to respond to them. The strawman you proposed is so far away from anything I said it is staggering. I have laid out the case for deflation a zillion times, all in the same way and you come along talking as if I said "commodites go up in deflation". It is damn annoying to have my position misrepresented that way. The other annoying thing is that I see a credit bust is coming. That does not mean it is here NOW. The fact that copper or whatever is rising now does not prove deflation is not coming no more than the Naz at 5000 in March of 2000 meant a stock market crash could not happen. I see a huge credit bust coming and a collapse of housing. Housing is the bubble of last resort IMO and it has now stalled it seems. The longer this mess keeps on going, the bigger the bubble gets in credit lending. Junk bonds and buybacks are now fueling this last liftoff. Everything might pop wide open tomorrow, in two weeks from now or in two years from now. I have no doubt that deflation kicks in long long before any hyperinflation scenarios being kicked around here and by Puplava. It will take real job and wage growth to forestall this too much longer IMO and I do not see that coming. Mish

To: TimbaBear who wrote (50212)	1/19/2006 1:21:38 PM
From: John Vosilla	Respond to of 110194

"Then the real question for the American future: "What will the situation look like if a currency collapse precipitates a credit collapse?" That is the main question in the ongoing cash is king versus cash is trash debate. Good to stay open minded. Like you say signs are pointing more and more to the latter which hurts the most people of all as the fewest are really prepared for that scenario. Sorry option ARM's on bloated CA real estate won't be saved in either scenario..