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

To: Steve Lokness who wrote (82135)	7/27/2008 3:07:33 PM
From: SouthFloridaGuy	Read Replies (1) \| Respond to of 116555

The GSE's alone were responsible for hundreds of billions of credit creation PER YEAR that can no longer be continued. $1 trillion is indeed inflationary, but when the U.S. loses its reserve status and leverage is forced to come down (it's already happening in the banking sector, the main creator of inflation), the Debt/GDP ratio may be cut in half - that's a loss measured in multi-trillions over time. Japan printed $1 trillion and it got them little. Why? You can have periods of price inflation within a deflationary cycle (think decades for cycles) due to the short-term constraints (peak oil, peak bread, peak whatever). However, I think that if we did not just see the top in oil, then the Fed will be forced to raise rates short-term, possibly to 4%.