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

To: Hawkmoon who wrote (100666)	1/14/2009 7:20:21 PM
From: forceOfHabit	1 Recommendation Read Replies (1) \| Respond to of 110194

Hawkmoon, I understand what you're saying about deflation and the velocity of money, but I disagree completely with the diagnosis of the problem implicit in your final paragraph: Right now we have too much supply, overstocked inventories, and not enough credit or cash available to convince the consumer to buy anything but the bare essentials. I think the more fundamental problem is that we have been living beyond our means, overconsuming at a prodigious and unsustainable rate. No amount of fed money printing / credit creation will be sufficient to return consumption (globally, and in the US in particular) to previous levels (other than very temporarily). imho, the goal should be to stabilise the currency (whether that be by a return to a gold standard or some other fiat currency based policy) because a credible medium of exchange is the sine qua non of any well functioning economy. Then we must pitch our economic activity at a sustainable level of consumption. The sustainability of our level of consumption can best be gauged, I suspect, by examining the rate of consumption of natural resources. This would include energy, oil for lubrication and plastics (potentially a more critical use for oil than fuel), agricultural and food resources (including terrestrial resources like rainforests and topsoil and marine resources like fish stocks and coral reefs), fresh water and air (including minimizing the amount of both lost to pollution). Not a simple computation by any means, but (imho) a necessary one. Given the natural proclivities of the human race, I view this as about as likely as the lead lemming in the suicide dash sprouting wings just in time to soar rather than plummet off the cliff. But by now we've wandered far from our starting point in economics, and even farther from my comfort zone as a trader. So let me try to bring us back to earth and the race to become lead lemming, or at least keep up with the pack. If you, like me, preferred a market neutral stance, what sector(s) would you be long, what short? habit