To: Real Man who wrote (14863 ) 11/22/2008 12:56:36 PM From: gregor_us 5 Recommendations Read Replies (4) | Respond to You can easily see what's referred to as the "policy mistake" that Japan made immediately following the Nikkei crash in 1990. They allowed the monetary base to crash. Buy the time they got the base up, there was no chance that any velocity would kick in. Whether one agrees with the policy action, one can understand why economists pretty much agree that Japan, had they wanted to avoid deflation, needed to act much much earlier. James Hamilton has been very adamant about Japan, and our current situation. He has asserted that Deflation can absolutely be avoided. I agree with him. Hamilton has said the FED can start buying assets all over the world, flooding the globe with dollars, and flogging away until sellers demand a much greater quantity of dollars to exchange their assets. I wrote the following as as example of what the FED could say in this regard: Hi, Ben here. Starting tomorrow the FED is going to be buying British stocks, and German stocks. And then, later in the morning, we are going to buy Brazilian stocks, and then some Mexican stocks. And later in the day, we are going to buy Australian stocks, and then some Hong Kong and Taiwan stocks and finally some Japanese stocks. And, we're going to do the same thing the next day, and then every day that stocks are weak, we are going to start buying again. And the way we're going to do this is we're going to print money to buy the stocks. And if you don't like it that we are doing this, then don't sell your stocks to us. Or, you might want to make us pay more dollars to buy your stocks. Or, you could shut us out of the market. We don't mind. Because no matter what you do, we are going to keep buying stocks, or, we are going to be prevented by you from doing so, and the result is that we will achieve our goal which is to get the exchange rate of the USD back down again against all assets, and also, to provided liquidity to global markets. In the process, we are going to gather an enormous quantity of high quality, dividend paying stocks. This will provide a nice stream of income for us in the years ahead. And, as I said, you can stop us anytime by simply making us pay ALOT more for these stocks. gregor.us gregor.us
