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


To: jimmg who wrote (75882)12/17/2006 3:31:48 PM
From: russwinter  Read Replies (2) | Respond to of 110194
 
I'm not saying I'm about to do it, but merely pointing out the psychology, and how financial assets can be mobilized to fuel a big inflation. I don't see how I could have been any clearer, so your response makes little sense to me. In fact if one isn't paying attention to an another big inflationary outburst (caused by printing presses), and just sits on money, he is being negligent. I am alert to it. I don't think we've had a true Flucht in die Schwerte in the sense I'm talking about either. It's a different animal.

Nor am I at all saying a flight into real goods will help the average person either. That wasn't at all my point, in fact quite the opposite. Nor am I drawing any linkage to the credit cycle, wages, or anything of that sort. Think too many people on here believe the bather about bad economies being deflationary. It's because we've had Mish on here for several years, preaching this crap. That simply isn't the case, and history is full of examples, especially when central banks panic. The fact that JSM house price is down, may or may not be deflationary or inflationary, depends a lot on the monetary response, and people's reaction and confidence in their currency.



To: jimmg who wrote (75882)12/17/2006 6:37:09 PM
From: kris b  Read Replies (1) | Respond to of 110194
 
At the end of this trend, asset prices rise because asset prices are rising.

To be precise, the asset prices are rising because the gain on them (30-50% per annum) is much higher then the cost of carrying them at 1-10% mortgage rates.