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

To: orkrious who wrote (88462)	11/5/2007 1:44:41 PM
From: GST	Read Replies (4) \| Respond to of 110194

So you go along with this? You want to call a credit contraction "deflation"? If credit is contracting and prices are soaring then you would have to call it a time of deflation despite what prices are doing. Is that what you want to do -- soaring prices mean nothing because we are really in a time of "deflation"? This where this stupid perversion of the English language takes you. A credit contraction is NOT deflation -- it is a credit contraction. Deflation is a drop in price levels. In one of his recent posts, Mish dispels the rise in oil prices as "inflationary" because it is not related to monetary expansion -- it is a joke. If you define inflation as an expansion of money supply then you are forced to ignore the camel in the tent -- soaring prices. Money supply is but one element in the determination of prices and currency valuations.

To: orkrious who wrote (88462)	11/5/2007 1:51:06 PM
From: Horgad	Read Replies (2) \| Respond to of 110194

"...contracting credit means most everything goes down (except gold of course)." The question that has been bothering me forever is which would perform better in such a scenario...cash or gold? Assuming that some confidence can be maintained in the dollar, I could see everything going down against cash even gold. Gold would fall less and slower than other stuff, so it would be increasing in purchasing power, but still falling against the dollar. Or do you think that since the dollar is now really just a worthless IOU that it will blow up with all the rest of the debt and only gold will be left standing?