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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 (74936)	12/6/2006 8:44:40 PM
From: mishedlo	Read Replies (2) \| Respond to of 110194

<sustained contraction> Let me know when it happens. It is one of the many important factors determining inflation and in the event there is a sharp, sustained contraction of credit -- one that is deep and prolonged -- then it will be worth noting. Until then I see nothing beyond the sort of thing you would expect in any market and/or business cycle -- just the same old ups and downs and no change in long term trend. Recessions don't usually lead to deflation, they lead to relatively short periods of weakness followed by the next upleg. There has been no period of deflation in the US in the last half century, although there have been many recessions. Expansion or contraction of credit is commonplace stuff. Deflation is exceedingly rare. I will not have to let you know when we are solidly entrenched in it. You will know. But otherwise I agree with nearly everything you said, including "deflation is exceedingly rare". It is indeed and it comes after credit and speculation maxes out. Most of the time inflation rules. The last time we had deflation was late 20's and 30's but Japan had it for 20 years recently. Mish