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

To: GraceZ who wrote (69827)	9/15/2006 11:29:04 AM
From: Paul Kern	Respond to of 110194

Grace, Do you: Shop for food? Drive? Receive medical care? Educate or plan to educate children? Fly? Heat? Cool? Believe the CPI?

To: GraceZ who wrote (69827)	9/15/2006 12:04:09 PM
From: mishedlo	Read Replies (2) \| Respond to of 110194

Grace there are many here who think we are in a high inflation environment. I would guess at least 10. If one looks at prices over the last 5 years, and ignores the last year, it is hard to say there has not been massive inflation. houses, gasoline, heating oil, medical expenses, and education have all soared. If you believe the CPI, you are probably a minority of one. If we forget about prices and look at the explosion of credit and the lowering of credit standards on top of it, once again it is hard to state a case for low inflation. My gripe here is the disingenuous way that every price rise here is labeled inflation while ignoring huge price cuts by builders over the last 9 months, gasoline prices now dropping, restaurant prices dropping, natural gas prices dropping, etc while posting "inflation du jour" comments on orange juice when it rises in the midst of another hurricane. When it comes to inflation expectations, nearly everyone here thinks home prices will crash but somehow inflation will still be high. Not me, I expect home prices will crash, jobs will too, foreclosures and bankruptcies sill soar, and people will be forced to cut back spending whether they want to or not. I expect the US$ to hold its own. By my definition those are deflationary forces, whether or not prices other than asset prices drop very much at all. Mish

To: GraceZ who wrote (69827)	9/15/2006 2:47:10 PM
From: Mike Johnston	Respond to of 110194

I am truly shocked at how out of touch with reality you are. Let's go back to your argument about the housing market and low inflation. I can just picture a homebuyer telling his real estate agent: " You know what, since inflation is so low and it is going to stay low and decline for the next 20 years, the net present value of all the future income that i will get from real estate is going to be so much higher than anybody else can imagine, so make sure my bids are the highest !" Here is my take: We have had the biggest housing bubble in history and people participated for 2 reasons: 1. The desire to get rich. 2. The fear of being priced out. I would sooner believe this line of reasoning:" you know what, inflation is rising , interest rates are only 2% so that 5% cap rate i guess doesn't look that bad, i better buy something now to generate higher income and protect myself in case inflation really shoots up"