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

To: mishedlo who wrote (66378)	7/19/2006 10:43:24 AM
From: John Vosilla	Read Replies (2) \| Respond to of 110194

'Yes I agree that the Fed could eventually induce hyperinflation by dropping money out of helicopters. OK, so would they? The reason they would not do so is because it would bail out consumers at the expense of banks. Does anyone really believe the Fed would bail out consumers at their own expense? I don’t. Yes, I believe they will try to help consumers, not by dropping money out of helicopters but by lowering interest rates. However unless jobs are created, with salaries that will allow consumer debts to be paid off, the Fed loses. Asset bubbles in the stock market and then in housing kept the consumer ready and willing to spend. What's next? If housing is the bubble of last resort, what would happen if the Fed turned on the pumps? I suspect money would go into gold and silver, but no jobs would be produced, certainly nothing like the housing boom produced' Mish I agree much more with you than you think. However the twin deficits along with the fed's ability to quickly inject liquidity and steepen the yield curve should not be dismissed. Nor should an American society now hell bent on consuming beyond their means. Also not to be dismissed is the unleashing of all the wealth of the greatest generation and silent generation to be tapped by their kids and grandkids. Housing has collapsed in Florida where it is the economy and yet most still seem to be working and the real economy keeps humming along. Yes there is a lag. I guess we shall see in a couple of more quarters. Why does the end game has to be deflation or hyperinflation? I guess they both sound so much sexier and generate much more interest than stagflation and a persistent squeeze on working Americans.

To: mishedlo who wrote (66378)	7/20/2006 1:38:27 AM
From: shades	Read Replies (1) \| Respond to of 110194

The reason they would not do so is because it would bail out consumers at the expense of banks. Does anyone really believe the Fed would bail out consumers at their own expense? I don’t. Mish when they did this in germany - didn't it bail out local customers (debtors) at the expense of local banks? Those 8000 german marks in a loan that previously would have taken you a year of work to repay only maybe took a day of paid work to repay. So why did they do that? Oh external DEBT you say - the very thing mosler and chromatic said are BAD and that we shouldn't have allowed because it causes the fed to lose so much power over monetary control to foreign creditors. That we should have kept the debt inside - globlization of debt is gonna cause hurt feelings in the future eh? Bernanke is beholden ultimately to congress eh? Ultimately they are beholden to pissed off voters. Pissed off voters care how much about debts that china man holds? Looking at zimbabwe - why do they do it? Buffet said we were ok when we were a creditor nation - in that instance bankers would probably do what you speculate - when you become a debtor nation - the rules change eh? I have been involved in real estate awhile - buying a chalet in france and turning over property management to a local who moves his sister in never seemed smart to me - towers of babel get built - then they get crushed - globalized debt can't be enforced eh? My cousin on the city council always gonna take care of me and my property rights over you half a world away eh?