To: Maurice Winn who wrote (25862 ) 11/30/2007 8:25:32 AM From: carranza2 Read Replies (4) | Respond to of 217571 my guess is that we don't go into a cascading implosion into a financial relativity theory black hole with an event horizon outside all. Some very knowledgeable people believe that deflation, like a bear market, cannot be avoided but must run its course. Some very influential people, including Bernanake, believe the printing press, and other measures, can forestall it. No clearer description of his mindset on the subject exists than is set forth here. The man will literally go to a zero interest rate to avoid deflation:federalreserve.gov Like you, I don't see deflation on the horizon. My feeling, for that is all it is, is based on Bernanke's Manifesto. Because Benny will absolutely, positively turn on the liquidity spigot to 'max' to avoid deflation and the deadly deflationary spiral even a bit of it could cause, en.wikipedia.org the obvious result will be inflation and perhaps yet another bubble somewhere because that is what excess liqudity does. The question is, therefore, what happens if there is no deflation and no need for Benny to turn the spigot to 'max'? This is in my estimation more or less where we are now. My guess is that the slowdown in economic activity coupled with the increased costs of just about everything will lead to stagflation, perhaps on a global scale, ameliorated to some degree by a lower price of oil and a lower price for commodities. As far as the markets are concerned, it is quite obvious, as the Abu Dhabians have recognized, that the US and its wonderful, efficient and income producing global corporations, are on fire sale thanks to the lowered dollar. Couple that fact with the huge dollar reserves the Chinese, Japanese and Arabs have at their disposal, and there is very little doubt in my mind that they will go on a shopping spree soon, with the beaten-up financials at the top of their lists. After all, if Abu Dhabi can get a chunk of Citigroup at a reduced price with a 11% coupon attached to it, what is to prevent others from going down the same road? The financial crisis will pass. When it does, those who got in while others panicked will have done quite well. As far as the barbrous metal is concerned, I will leave you with this deeply detailed and thoroughly researched report published almost 2 years ago predicting exactly what has happened to gold. Do not give it the knee-jerk 'Aztec barbarity' treatment. Read it with an open mind, it makes several very good points:gata.org