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

To: TimbaBear who wrote (71434)	10/8/2006 8:49:05 PM
From: mishedlo	Read Replies (1) \| Respond to of 110194

Why is that the answer? Did you see the housing bubble on the horizon when the dot.com bubble burst? I'll assume you'll answer honestly and indicate you really weren't even looking at economic issues very much back then but were still heavy into your engineering career. That aside, just because you don't have the vision to predict the next bubble does not mean there won't be one. You are correct. I was not looking at economic issues back then. Not engineering career but IP career. There were howvever, people that did priedit the next bubble in advance. Richard Duncan was one of them. It got much bigger than he thought but he did call for an echo bubble in housing. I highly recommend Duncan's book. amazon.com BTW - I will make something like 25 cents if you order from that link (off my blog). If you want to order that book and have that quarter go to Amazon and not me just head straight to Amazon. Anyway the housing bubble worked because it provided a source of jobs. A massive source of jobs in fact. Now it seems hyperinflationists have their hopes pinned to an even bigger bubble. The key is that unless it provides jobs it is more or less useless. Thus a bubble in gold or silver or anything like that will not do it. The second point is "will the Fed bail out consumers at the expense of banks?" That is what you are suggesting. So hyperinflationists have two nuts to crack. Actually there is a third nut, would it work even if they tried. Japan tried and failed. To to believe in reflation here you have to 1) Believe there will be yet a bigger bubble 2) That bubble will employ enough people to make up for losses in housing 3) That the Fed would really attempt such a thing 4) That it would work Of those only #3 is plausible IMO, and there is no guarantee of it even though I believe it is in fact likely. I also believe that the Fed may attempt to do so but they would not carry it forward to the point it would destroy banks just to bail out consumers. Besides the Fed can provide credit, the Fed can not force anyone to take it. That is what happened in Japan and I suspect it will happen here as well. Nor can the Fed create jobs even IF there are takers of the cash. The Fed can print, it can not dictate where the money goes. Think of all the things that have to happen to bail out consumers and tell me how probable that is in a sustained housing slump with global wage arbitrage to boot. I suggest you can't do it. I know I can't. Yet I keep hearing the Fed will print its way out of this. No one has ever said how. Mish