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

To: KyrosL who wrote (88571)	11/6/2007 7:31:16 PM
From: pogohere	Read Replies (1) \| Respond to of 110194

GST: Re KyrosL"s: "It's not going to kill you if you admit you are wrong from time to time." Don't listen to K.

To: KyrosL who wrote (88571)	11/6/2007 8:54:44 PM
From: GST	Respond to of 110194

<Nobody disputes that "deflation" means a decline in prices> Not so -- although I wish you were right!! According to your source "debt-deflation" is NOT a variant of deflation -- i.e it is not a decrease in price levels of debt -- rather it is a term intended to suggest that a process where deflation might be made worse by the liquidation of debt. There is nothing in the model that is presented that says that debt liquidation is anything more than one of the factors that can lead to or worsen a deflation -- and in this paper there is never any doubt that deflation refers to price levels. Nor is there any reason to believe that debt liquidation cannot have other consequences. What the paper makes clear is that it is examining a theoretical model of a process -- and debt-deflation refers to the model. As such, there is no such thing "as debt-deflation", only deflation made worse by the liuidtion of debt. If you post on this thread about "debt-deflation" do you think that people will know that this is not a reference to deflation itself, but rather a model that adds insight into some of the possible dynamics of processes that might contribute to deflation? The liquidation of debt can drive down prices -- that is the bottom line and it is very sensible. I object to the convoluted references to things that confuse the discussion by mis-leading people, on purpose or otherwise, into thinking that that are many flavors of deflation, only some of which involve a decrease in price levels. Deflation means only one thing -- as your paper states -- and that is a persistent decrease in price levels. Having said all this -- thanks for the paper, it is very interesting and I had not seen it :)