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

To: benwood who wrote (94192)	5/13/2008 5:58:49 PM
From: GST	Read Replies (2) \| Respond to of 110194

What irks me is the way words are used to create confusion (it used to urk me but now I know better). Anybody who denies that we are in the grip of a dangerous inflationary cycle is either lying, a fool or both. Deflation in the US is about as likely as time travel -- and for a very good reason. When we as a debtor nation -- and we are a debtor nation that has set an entirely new standard for that term -- find that the assets against which we borrowed, and the assets we sell to foreigners in return for their goods are not worth what we said they were worth, we have a problem that is never going to be resolved by lower prices. Our debt problems will be solved, by lower asset prices. And lower asset prices means higher inflation. It is ignorance to say that lower asset prices are a harbinger of deflation -- they are not. The reason for this is in plain view -- we finance our lifestyle by borrowing against or by sale of our assets. If our assets are worth less then we will pay more to get others outside the US to hand over their goods in return for our assets. Houses are a measure of our asset values. In the end, the dollar is the ultimate measure of our assets. Assets down, prices up -- that is the inflationary cycle we are in, and it is not at this stage a matter of printing money, although that could throw more fuel on the fire.