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

To: GST who wrote (90090)	1/4/2008 2:37:40 PM
From: Perspective	Read Replies (2) \| Respond to of 110194

I personally have no conviction about the 'flation debate. However, I will chime in with this: What happens when asset prices fall around the world? Stocks and real estate in unison. And economic activity follows. Price is an equilibrium point set by supply and demand for goods and services. At the margin, falling demand lowers prices and inflation. For all the hype about the powers of the printing press, I actually think the Fed (and other central banks) has far less control over credit creation than even 10-20 years ago. The boom took place outside the banking monetary system, and the bust will as well. Unless (and until) the Fed/government take unconventional action (buying assets outright to prop prices), this is an ordinary business credit cycle like any other, subject to the historical relationships between supply, demand, and pricing. Currency movements may cause country-specific outliers, but the global trend will be for falling inflation as the engines of credit creation sputter. `BC