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

To: Mike Johnston who wrote (74824)	12/5/2006 7:54:46 AM
From: Box-By-The-Riviera™	Respond to of 110194

argentina style. stocks went up too.

To: Mike Johnston who wrote (74824)	12/5/2006 8:00:24 AM
From: russwinter	Respond to of 110194

I think both you and Mish are confused about the mechanisms for all this right now. The misconception on your part: this liquidity creation has gotten a life of it's own, and is being created by private parties "out of thin air", from carry trades, etc. It may be debatable, but I don't feel monetization by monetary authorities is out of line right now. Something else is going on. Of course, you caught that something else aspect in spades by asking why prices are high on ALL financial assets. Mish's big misconception is that low US Treasury rates are a disinflationary, or deflationary economic signal. Nothing could be further from the truth. Long term Treasuries have caught a very severe bid from speculators as part of their levered game. They are also piggybacking sloppy buying from official sources. Mish just acts like $208 billion in the last year in reported (who knows how much China has bought unreported) FCB purhases is just normal and therefore meaningless. In fact, it's a major market pricing distortion that has facilitated and encouraged massive, unrestrained global speculation, and unproductive credit creation. Mish does pick up in spades, how that will all surely blow up. I just believe his beloved Treasuries blow up as well.

To: Mike Johnston who wrote (74824)	12/5/2006 1:11:35 PM
From: mishedlo	Read Replies (5) \| Respond to of 110194

Mike, point by point my responses immediately follow your comments. Mish 1. Money supply growth in the US is running anywhere between 10-20% a year. Consumer inflation is running at 8-10%, poised to accelerate. 1A. I Disagree. CREDIT is expanding that fast (just as it did in 1929). Consumer inflation is nowhere near 8-10% a year (especially for the last 6 months or so). All kinds of prices are down: homes, gasoline, restaurant prices, prices at Walmart, generic drugs, and to top it off wage growth is nonexistent (for the masses). Homes dramatically understated CPI on the way up and seem to be overstating CPI on the way down. 2. The Fed has already gone unconventional, having started bond market monetization in order to support housing. Money supply growth should hit 20-25% next year because of that. 1A. Disagree. There is no indication of bond monetization to support housing and IF Money supply rises that fast (as opposed to credit) it will be because credit is out and out plunging (aka massive bankruptcies). 3. No economic statistic and no number can be trusted anymore. 3A. A few but not many can (initial job claims is for the most part accurate, and I actually happen to believe M1. Coupon passes should confirm growth in Money (as opposed to credit). 4. The Fed has/is injecting cash into Fannie Mae. That is why risk has vanished overnight, stock is rising and no reports are being filed. 4A. Certainly speculation with no proof. Possible but unlikely. Occam's Razor would disagree and simply call it insane risk tolerance on behalf of investors. 5. Stock market is rising because the measuring unit, in which stocks are denominated, the dollar, is losing value quickly. 5A. Stocks are rising primarily because of an insane appetite for risk. Period. In a world awash in both over capacity and dollars, those dollars are seeking risk. The process continues until it blows up or the appetite for risk changes. Neither of those outcomes will have anything remotely to do with hyperinflation. A credit crunch with this much debt in a slowing economy will send unbelievable amounts of credit to money heaven. DEFLATION. 6. All around, there is a flight from money that is slowly gathering steam, with people frantically searching for a vehicle that will increase in price the fastest. 6A. Yes, just as happened in 1929. Bottom line Mike J: is that money is being printed at a rapid clip. With money growth at 10-20% combined with 4% interest rates, hyperinflation is a guaranteed outcome. Bottom Line Mish: Credit is expansing at a rapid clip. YOY growth in money is actually close to zero (and I have some charts to prove it, and will do so soon). There is no productive use for money, only speculation. Unlike Weimar printing presses in Germany where money was printed by the government, we are in a situation where credit extended on the money that is printed has exponentially soared (and NONE of it for productive uses). Again this is exactly what happened in 1929 and is playing out right in front of our eyes. If you really believe in hyperinflation then I suggest buying houses and leap calls on Google and Goldman. The further out of the money the better. This extended credit is going to money heaven and there is one word for that: DEFLATION Mish

To: Mike Johnston who wrote (74824)	12/5/2006 3:44:12 PM
From: Broken_Clock	Respond to of 110194

Agree except for the conclusion. "Bottom line is that money is being printed at a rapid clip. With money growth at 10-20% combined with 4% interest rates, hyperinflation is a guaranteed outcome." The gov't of the $$$, by the $$$ and for the $$$ will consolidate control via electronic controls, 99% likely an implanted rfid chip coming to a needle near you shortly. Think national emergency. Nightline had a neat piece last night showing congress has worked fewer days this term than any other in the history of the US. Total abdication of power to der Fuehrer.

To: Mike Johnston who wrote (74824)	12/8/2006 9:43:19 AM
From: shades	Read Replies (1) \| Respond to of 110194

Sand from the Spigot 3. No economic statistic and no number can be trusted anymore. Trust your own eyes Jedi. The wizards have spells everywhere, you must cast disrput Illusion! I had some friends come down from north ga, it is cold up there at night, like 30 degrees, still around 60 at night near me in clearwater. We all go to starkey park in pasco florida to camp for a few nights. Go to the kiosk, no park guys are there. Set up camp, burn a nice fire all night. Next morning park guy shows up comes over asks why we are not in the books registered, tell him we couldn't find any park people, he says you are lying, kicks out our fire and tells us we owe him 5 dollars for the night. I said I can't sleep on the ground for free - he gets mad and says no - I said damn, my parents in thier VW van slept all over america and europe for FREE back in their youth - he said those days are over and that even PAYING we can only stay for a MAXIMUM of 7 days - I am foaming at the mouth mogambo style in utter astonishment. I call the park system - ask if there is ANYWHERE I can stay over a week or 2 close by - they say no - I said PHUCK! I then ask ok - anywhere I can stay under a week or 2 for free besides wal mart parking lot - they say sure there is ONE place close by - crews lake park. pascocountyfl.net I go to this park, talk to the park guy, he is selling his carolina skiff that him and his son go fishing in - I say hmm - what do you fish with in crews lake - he laughs at me - I don't GET IT. He says you haven't seen the lake have you, I said no, I normally fish the ocean, but my ga friends want to do some freshwater fishing - he just laughs - says go look at the lake. Now this park is near the suncoast toll road, new road for all the commuters to get into tamps, all these new lennar and similar developments going up all over where folks like Dale Baker bought lots of land back when it was 2K an acre a few years back instead of 30K now, CREWS LAKE PARK has a very expensive and expansive fishing pier, public boat dock, expensive park people to manage the lake and park - observation tower to look out over the lake. I drive up to the lake - no lake - not just a low lake - NO LAKE - gone. I ask one of the park guys why are my taxes going to pay for all this buildout of a park with a lake and there is no lake - he said good question. BWAHAHA! I say all the developments have sucked the water dry eh? He says yah, hasn't been a lake for about a year now, I said how many county commissioners have to turn on thier water and sand come out of the spigot before they stop approving all this new development - how in da phuck do they play with the phony numbers to keep BUILDING and BUILDING and the lake is gone? He said don't fret - walk out across the lake (its dry now you see) avoiding the gator corpses, fish bones, and snake corpses and look at the other side of the lake - I figure sure I am bored - why not. He told me look for those 700K home owners that bought 700K homes a few years ago to be right on the lake and ask them how they feel with thier 20K boat in thier backyard with no lake to put it in - BWAHAH! HAHA!! How do you have a park called CREWS LAKE PARK and there is NO LAKE? You could stay for free, for 7 days, I said hell - with all this empty land where there used to be a lake and no one out here using the park - why can't I stay for more than 7 days - park guy says rules are rules - go figure. At least I can still get 7 days for free in a deserted LAKE park with no lake, I guess I should be thankful eh?