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

To: GST who wrote (69848)	9/15/2006 4:44:51 PM
From: KyrosL	Read Replies (1) \| Respond to of 110194

There are two secular trends that argue for long term deflation. One is the plateauing of human population, which we will experience within the next few decades. Already populations in the developed world are dropping, excluding immigration. And in some pretty large developing countries fertility rates are already below replacement level (China, Brazil, etc.). The second is globalization coupled with huge productivity increases in the developing countries. This results in cheap goods worldwide and, increasingly, cheap services -- for example, IT. And some presumably untouchable services, such as medical, start getting affected too. People are taking trips to India and Thailand for their hospital operations at less than a quarter the US cost with a free vacation thrown in.

To: GST who wrote (69848)	9/15/2006 5:02:00 PM
From: jackjc	Read Replies (2) \| Respond to of 110194

Excellent post, the facts in brief. I have seen the US dollar purchasing power fall from adjusted 1.00 at birth to .06 today. A relentless one way inflation which varies in magnitude at times but never in direction for any meaningful time period.

To: GST who wrote (69848)	9/16/2006 10:58:45 AM
From: YanivBA	Respond to of 110194

Beautiful picture in the Big Picture today (and a note): bigpicture.typepad.com You notice how there is no middle contraction in this picture? This is because this picture is based on an inflationary cycle where the economic expansion and the credit expansion are longer than the contraction that follows. I think what Mish is saying and I support is that you need to think in terms of switching to a deflationary cycle. I don’t know what the deflationary cycle looks like exactly but I know there should be a middle contraction. The stock market has now priced in a "late contraction" position on the inflationary cycle. If we are really there then the real estate bubble must make a ultra-quick soft landing and at the very least stabilize at current levels. Any real estate hard landing would produce a devastating negative wealth effect that is going to cause a much longer credit and economic contraction. I personally don't believe a soft landing is possible unless the fed opens the flood gates right now. Even if it acts immediately it might be too late because all the liquidity will only fuel gold, oil and emerging markets. In my view we are only at an "early contraction" position. Commodities have a lot more to fall. YanivBA