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

To: pogohere who wrote (90086)	1/4/2008 1:37:28 PM
From: GST	Read Replies (1) \| Respond to of 110194

There is no question whatsoever that people put money into a toilet and gave it a flush, then flushed it again, and flushed it twice more for good measure, and still it needs to be flushed a dozen times more to get the turds crammed down the bowl and into the sewer where this shit belongs. The losses are truly staggering. We are seeing a weak economy and it will get worse and stay bad longer than most people expect. But none of this -- I repeat none of this -- means we are going to have deflation in the USA. That is the rub. Recession does not mean deflation. Losses do not mean deflation. A credit crunch does not mean deflation. The mental leap from "shit hits the fan" to deflation is not based on any meaningful understanding of our financial situation. There is more shit heading for the fan than we can imagine -- but it is not a harbinger of deflation. You can talk shit all day long --and it does nothing at all to bolster the case for deflation. An import oriented country with a zippo savings rate, huge debts and an astronomical current account deficit does not see its currency go anywhere but down the toilet when the music stops. The dollar is the big turd -- the really giant turd. Right now it is going round and round in the bowl - lower each day but still not where it is headed as we flush the toilet again and again. That turd is not going to suddenly leap from the bowl and become a bouquet of roses in a vase -- and that is what it would take for us to have deflation in the US. On the countrary -- the more we flush the toilet, the closer the big turd gets to going down for good.