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

To: Horgad who wrote (82266)	5/31/2007 11:11:02 AM
From: John Vosilla	Read Replies (2) \| Respond to of 110194

'Also the fact that many things are inflating now, does not in any way invalidate the deflation argument. In a way it even supports it. Joe Six Packs are getting squeezed from every direction by inflation, but they are seeing little inflation benefit (no more house inflation, extreme lagging wage inflation). As a result Joe Six Packs are getting pushed closer and closer to insolvency everyday (deflationary). Of course the wildcard is that the gov. can print all the Joe Six Packs back into play with a flick of a switch.' Yes all you describe appears to be unfolding. Bottom line on the past five years is if you didn't protect yourself for inflation you have fallen much farther behind. Was Mish, Fleck, Tice or any eternal doom and gloomer telling you or I that 2-3-4 years ago? It seems our esteemed leaders/Goldman mafia don't want to let the normal business cycle run it's course thinking it is win win with J6P better off in any situation as long as he still has a job and the suits continue minting money in their pocket.. I totally agree with you now that deflation, even depression is now looking more and more like a possible scenario looking 1-3 years out. But will DOW and emerging market stocks double first? Only recession and a large back up in long term rates will save us from doom?

To: Horgad who wrote (82266)	5/31/2007 12:14:31 PM
From: Mike Johnston	Respond to of 110194

Also the fact that many things are inflating now, does not in any way invalidate the deflation argument. In a way it even supports it. Joe Six Packs are getting squeezed from every direction by inflation, but they are seeing little inflation benefit (no more house inflation, extreme lagging wage inflation). I think what you are talking about is not deflation the way it is normally understood, but deflation in purchasing power of JQP's earnings and savings. monetary inflation = deflation of purchasing power As money supply goes up, purchasing power of money goes down. That is the reason that no nation can print its way to prosperity, in fact inflation causes societal collapse and misery. The Fed will print full steam to inflate the money supply, but the purchasing power of this money supply will go down, as it has for the last few years.