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

To: Little Joe who wrote (89059)	10/24/2008 1:12:33 PM
From: SouthFloridaGuy	Respond to of 116555

Japan has tried that for years, it was called quantitative easing and it spawned bubbles from Iceland to Ukraine. They went from 400% debt:gdp and are now at 300% after 18 years and a new low in the market recently. Great! It doesn't work if there is no velocity of money.

To: Little Joe who wrote (89059)	10/24/2008 1:17:04 PM
From: Elroy Jetson	Read Replies (1) \| Respond to of 116555

Let's assume we've so far experienced $60 trillion in losses globally. Let's assume we've seen perhaps $12 trillion of these losses temporarily monetized. This leaves us $48 trillion in monetization short of getting price levels back to those of two years ago. If you want inflationary prices, you're going to have to overshoot. But you'd best do it quickly as the losses continue to grow. Inflation will occur if and when monetization schemes occur after the market has bottomed. Funding infrastructure projects to create jobs in an environment of 15% unemployment and idle steel mills will not be inflationary. Funding more spending than allowed by capacity constraints, such as after the economy has begun to recover, would be. .