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

To: mishedlo who wrote (71812)	11/29/2007 1:47:27 PM
From: Real Man	Read Replies (1) \| Respond to of 116555

Mish, when foreign credit is crashing, then you get a currency crisis and a nasty brew of stagflation. You had a nice blog on moral hazard. This seems to imply that the rich benefit from the Fed's policies, but this is not the case, I think. Inflationary policies always shift the focus from manufacturing to speculation, which leads to a destruction of the real economy and real businesses. Who benefits? Speculators and Wall Street. Real businesses and business owners actually suffer. You can see that in the World top rich, who typically are business owners, not speculators. Short 5 years ago all top 10 rich were Americans. This is no longer the case. The World richest person is no longer Bill Gates, it's Carlos Slim Helu from Mexico, and there are only 3 Americans in the top 10 rich. Blowing bubbles does not benefit the rich. It actually destroys the real economy, with both the businesses and real people working for these businesses. It benefits speculators, employment in speculative sectors, and leads to a huge unfair redistribution of wealth, from the real economy to Wall Street financial economy, until a crisis hits because the real economy that supports Russ's "fictitious capital" financial economy no longer exists. That's exactly what happens during hyperinflationary depression. We still have not been able to figure out why M3 is growing 18% with all the collapsing credit mess.

To: mishedlo who wrote (71812)	11/29/2007 1:47:56 PM
From: sea_biscuit	Read Replies (1) \| Respond to of 116555

We are already seeing inflation at the gas pumps, in the grocery stores, health care expenses, education expenses, property taxes etc. etc. If necessary, the government will create money out of thin air and throw it at the markets to make the Dow go to 15000 or 17000 or higher. It is silly to argue about a bear-market in stocks when the other side is armed with a printing machine! Please note that I am not talking about a "prosperity bull-market". It will be an inflationary one instead.