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

To: Broward Horne who wrote (80311)	3/24/2007 2:44:00 PM
From: Elroy Jetson	Read Replies (1) \| Respond to of 110194

Inflation and monetary devaluation is one possible "solution" and the one the Fed seems to be turning to first, and the solution preferred by the IMF. But inflation inflicts immense economic costs in addition to the costs inflicted on savers and pensioners tied to the dollar. There are other solutions, such as the destruction of the mortgage lenders and borrowers through defaults. If the majority of potential losses resulting from mortgage defaults truly lies outside of the banking system, as the Fed assures us is the case, I think this may end up being the likely longer term solution. This "solution" also involves pain for many pensioners and savers, although they may not realize this is how their money is invested. .

To: Broward Horne who wrote (80311)	3/27/2007 6:13:12 AM
From: Dan3	Read Replies (2) \| Respond to of 110194

Re: The Feds are going to do a bond burnoff. That's essentially what they did in 1994-1995 to rebound the economy. The sharp reversal in interest rates shifted over $1 trillion from savers to borrowers. This time they'll do a burnoff in mortgages, running an inflation rate that exceeds the lowest mortgage rates. I'm thinking we need a shift of $4 to $5 trillion to regain short-term balance. There's a chunk of pensioners who are going to get shafted. I tend to agree, except, wouldn't that crash the dollar and cause inflation to jump?