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

To: kris b who wrote (75448)	12/13/2006 5:46:16 AM
From: Mike Johnston	Read Replies (2) \| Respond to of 110194

You still didn't answer my question. Very simple question. How will the FED get this liquidity into the hands of households like yours and mine. At no point in the discussion with Mish have i mentioned that Fed will directly reliquify households. All i have said is that if Fed starts monetizing the bond market, hyperinflation would be a likely result. So again, the answer to your question is no, they will not be directly reliquifying households. As i have said many times, the result of all this currency debasement will be a portion of society sinking into poverty due to wages not keeping up with inflation. I have also said, that the Fed might print money to reliquify banks, GSE's and to buy government debt and the Treasury might again some day provide liquidity to households in the form of tax cuts or credits.

To: kris b who wrote (75448)	12/13/2006 5:58:25 AM
From: Mike Johnston	Read Replies (1) \| Respond to of 110194

Don't forget the fact that most households have been getting a free ride in several aspects: 1. Long term interest rates went down from 5.20% to 4.40% recently, despite the fact that inflation is much, much higher than that. 2.Stock market is very strong, 401K balances are doing very well and extremely well if partially invested in foreign markets. 3.Housing prices while declining are not collapsing. The declines so far are small considering the enormous increases in recent years. 4.Higher end is experiencing record incomes. 5.Millions of households refinanced their mortgages for 15-30 years at 4.5-5% in 2003, which is free money considering current inflation at much higher levels and annual housing inflation from 40-50% to as much as 100% in 2003-2005 6.Gas prices declined in recent months.