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

To: Fiscally Conservative who wrote (71474)	10/9/2006 10:29:42 AM
From: dpl	Read Replies (1) \| Respond to of 110194

.",I'm curious why in the last few years given so much loose credit available and those who took advantage of it why inflation was not more a concern" Because most of the credit goes towards bidding up the price of assets.

To: Fiscally Conservative who wrote (71474)	10/9/2006 12:19:22 PM
From: mishedlo	Read Replies (1) \| Respond to of 110194

In the 70's we had wage price spirals Now we have asset bubbles First in stocks then in houses The ramifications of bustiong those bubble will be severe as they have supported consumption In contrast once Volker stopped the wage price spirals, falling interest rates supported consumption This time when rates fall it wont do much of anything and houses are going to get crushed. We have headwinds now affecting both asset prices negative savings unsustainable home price lunacy global wage arbitrage slowing world economy credit bubble that will bust Mish