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Politics : Welcome to Slider's Dugout -- Ignore unavailable to you. Want to Upgrade?

To: Fiscally Conservative who wrote (11244)	8/21/2008 5:09:36 PM
From: jim_p	Read Replies (2) \| Respond to of 50328

As a matter of last resort the Fed can always print money which will lower the value of the USD and offset deflation. My concern today is the magnitude of the problem is larger than anyone could have ever envisioned and historically the unwinding process of over leverage is a process that can take a decade to accomplish. So the bigger question should be can we reduce the process from a decade down to a few years? It's never been done before so why should be believe that we can unwind a decade of over leveraging in just a few years? As a rule of thumb the time it took to go to extreme over leverage is about the same amount of time it will take to complete the deleverage process. On top of all the problems associated with the housing/credit bubble we have both high energy prices and contracting credit at rates never seen before in the history of modern record keeping. The contraction of M3 should continue at record paces for some time to come. The only bright spot that has held the economy from going into a tail spin has been to rapid expansion of developing countries and that is now coming to an end and it is also where all of the very serious inflation problems lie today. Jim