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To: kacy_in_LA who wrote (5804)	2/1/2006 11:09:42 PM
From: Lhn5	Read Replies (2) \| Respond to of 78412

Would not hyperinflation lead to a depression?

To: kacy_in_LA who wrote (5804)	2/1/2006 11:22:06 PM
From: Cogito Ergo Sum	Respond to of 78412

I agree. The US will no longer be the centre of the economic world... We have warm weather ? The Europeans freeze and the Asians suck up all they can... I'm in Don Coxe's camp :o)

To: kacy_in_LA who wrote (5804)	2/1/2006 11:41:21 PM
From: loantech	Read Replies (2) \| Respond to of 78412

What I am seeing on the micro level from working in the mortgage business is total debt to income ratios are rising and I don't see wages jumping enough to service the debt. Also a large number of stated income loans meaning people don't qualify. So I see a depression for a small number of people that have bought or refinanced wrong. Worldwide I have no idea.

To: kacy_in_LA who wrote (5804)	2/2/2006 11:52:35 PM
From: Nevada9999	Respond to of 78412

That is the present economic theory. Recessions and depressions are caused by tight monetary policy. The longer that hypothesis can be maintained the longer the easy money policy will continue and the worse the ensuing mandatory tight money and recession/depression will be. The Fed does not prevent recessions, it creates them. The Fed was created in 1913. The US dollar had moved sideways in buying power for decades prior to that. It has lost 95% of its buying power since then. Alan Greenspan is widely considered the most successful Fed Chairman ever. US money supply has increased by very much more between 1987 and 2006 than between 1776 and 1986. What I just said is that Alan Greenspan has created more US dollars in 20 years than had been created in all of US history. Has it worked? Presently, most would say yes. My concern is whether this kind of policy is sustainable. The 1920's in the US was a period of unprecented debt expansion. If margin debt had been further encuoraged and monetary policy endlessly loosened would the Dow have risen to 11,000 by 1940 instead of 1999 and would it now be 11,000,000. That is what current economic thinking would indicate, but I am skeptical once again. Lets consider busts of the past. In the Dutch tulipmania, speculators were expending years or decades worth of capital for a single tulip bulb. A 72 year bear market followed. What provokes one to pay such a sum for a tulip bulb? Excessive money supply, I think. That was 500 something years ago. Think of the price of tulip bulbs now if that could have been sustained. Did lack of exceptionally easy money kill the boom? Yes. Could increasing money supply have sustained it? No. I believe it is excessively easy money that eventually results in depressions, not the eventual, inevitable tightening. It is all about sustainability. The South Seas Bubble, the Mississippi Bubble, the Dot com bubble, they are all so similar. Last year I heard the word "quadrillion" used for the first time in context to the US dollar. Only with regard to notional values of derivatives, probably no need to worry. So, Is present monetary policy sustainable? I think a good measure is dollars (debt) created per dollar of GDP created. In a healthy economy that ratio is a single or very low double digit number. I think it is now a much higher number for the US, maybe three digits. I don't have a link. Feel free to go out and prove me wrong (or right). I guess the basic question is: Is current US monetary policy long term sustainable (trade deficit, national debt, social security, etc, etc)? Larry Kudlow says yes, John Snow says yes, kacy_in_LA says yes. Did I mention that I am skeptical?