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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: sea_biscuit who wrote (64259)	3/7/2007 2:29:21 PM
From: Elroy Jetson	Respond to of 116555

So very true, with every fix employed to prevent a de-leveraging in the economy, the risk increases and the leverage grows higher relative to income. Unexpectedly, someone cries "Samson, the Philistines are upon you!" and the central bank and others have to immediately come up with a new trick to pump currency - an expensive and pointless war in Iraq, or a new credit fueled bubble in some sector of the economy. But as Joseph Schumpeter said, "Policy does not allow a choice between depression and no depression, but between depression now and a worse depression later. Inflation pushed far enough would undoubtedly turn depression into the sham prosperity so familiar from European postwar (WW-I) experience, and would, in the end, lead to a collapse worse than the one it was called in to remedy. For recovery is sound only if it does come of itself. For any revival which is merely due to artificial stimulus leaves part of the work of depressions undone and adds, to an undigested remnant of maladjustment, new maladjustment of its own which has to be liquidated in turn, thus threatening business with another worse crisis ahead." .