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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 (75261)	12/11/2006 11:13:15 AM
From: John Vosilla	Read Replies (1) \| Respond to of 110194

'We are a nation that imports what it consumes and saves nothing. The Fed can do little in the future to stop all of this, and anything it can do will stimulate even worse inflation. The future is not made of an alternative between inflation and deflation -- the future is an alternative between bad inflation and really bad inflation' Shouldn't this in part be offset by the balance sheets and strong liquidity on the balance sheet of both corporate America and the wealthiest in this country. Such an incredible divide yet their purchasing power shrinks the most in percentage terms with a declining dollar. The highly leveraged masses probably don't benefit by inflation and those betting on deflation will be naked with rocks tied behind their feet? So it sounds like the only real winners are those who time entry and exit into various assets. Lots of volatility to come I would say..

To: GST who wrote (75261)	12/11/2006 12:01:32 PM
From: Oblomov	Read Replies (2) \| Respond to of 110194

>>>Inflation will reinforce the divide in the US between rich and poor -- but that is another story. On the contrary, inflation closes the "divide" between rich and poor. This is exactly why it is so pernicious, because it shrinks the relative rewards for saving, investing, and producing.

To: GST who wrote (75261)	12/12/2006 3:00:31 AM
From: bart13	Read Replies (2) \| Respond to of 110194

Our trading partners finance our deficits. We could finance our own deficits but we do not save anything and so must turn to others for credit. Our creditors in Japan and China finance our deficits to keep our economy growing. So long as we grow, they will provide the trade credit we need to buy. The price of what they sell to us is in no small way dependent on the purchasing power of our dollar. The purchasing power of our dollar is dependent on their willingness to finance our deficits. In the event of a slowdown in our economy our deficits will not go away -- indeed they are likely to persist and in some areas like our government deficits they are likely to grow. Even our trade deficit could worsen initially in the event of a slowdown as imported goods and services are cheaper than domestic goods and services. I could quibble with your other paragraphs, but as far as I can tell any disagreements in them are minimal. And for the record, I'm not invested for an intermediate or longer term deflationary scenario. Disinflation sometime over the next year to 18 months - good probability. But I won't bet the farm. Anyhow to your points above, I'm assuming you're addressing the how "international trade related imbalances" creates inflation area. I don't at all disagree that Asia and others are doing much of that financing and that the dollar value is very key... but the money they send us has to come from somewhere. Obviously some comes via the payments the US makes for those goods... and here I jam up again in trying to understand your full view. I can't go with the extremely broad "excess money creation" area since you don't seem to buy it, so the best I can do is ask you to please continue the logic train. I honestly am not trying to set you up, I just plain am not tracking. I may disagree with you and I may not - I can't tell.