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

To: UncleBigs who wrote (62280)	5/31/2006 12:13:08 AM
From: bond_bubble	Respond to of 110194

Uncle, it is CREDIT DEFLATION. Not necessarily lower goods price. CREDIT DEFLATION does NOT mean lower CPI, just as credit explosion did not result in higher CPI. CPI is some random metric that is not well correlated to money supply. Why should it fall if credit deflates? Most importantly, if Credit deflates and the value of that money also deflates, there should be no general price fall as well. For all you know, BLS might report that Core CPI is 1.9% for the rest of the year!! Still credit deflation will happen. And the number BLS reports will be 1.9%. Who cares what that number is? What matters is unemployment, credit deflation etc.

To: UncleBigs who wrote (62280)	5/31/2006 1:55:11 AM
From: GST	Read Replies (2) \| Respond to of 110194

In 1929 we were not borrowing trillions of dollars from foreigners to fill the gaping wound in our economy called the current account deficit. Had we been in that position, the crash of '29' would have led to severe inflation. We, collectively, owe trillions of dollars that we cannot hope to repay and we are dependent on finding stupendous new amounts of offshore cash each year to keep our heads above water. When the dollar is finished being turned into toilet paper on international currency markets, it won't buy you jackshit. That is called inflation.