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

To: russwinter who wrote (53671)	2/14/2006 12:56:57 AM
From: bond_bubble	Read Replies (2) \| Respond to of 110194

Russ, Debt/Credit deflation can happen in two ways: 1) Default on the debts - which causes total debt to fall. & 2) Devaluation of the Debt value i.e devaluation of the "currency" in which the debt is represented. Which do you think Doug Noland is arguing for? In both the cases interest rates will increase, doesn't it? I'm assuming, Minsky is also referring to default based credit deflation, is that correct? Just as monetary inflation caused assets like stocks, bonds and houses to go up in price, and no price increase in the so-called essentials (CPI basket), the debt deflation should cause exactly the same in reverse - deflation in stocks, bond and house prices and not so much price fall in the essentials. Is this your expectation as well? This is however, my expectation.