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

To: SouthFloridaGuy who wrote (93335)	1/25/2009 12:44:21 PM
From: Jim McMannis	Respond to of 116555

Are dropping home prices considered deflation?

To: SouthFloridaGuy who wrote (93335)	1/25/2009 3:57:12 PM
From: Claude Cormier	Read Replies (2) \| Respond to of 116555

I know what he thinks. But he has not answered the real question. He has not negate the argument below. Mish says that that the collapse in credit is highly deflationary and that is the bulk of it. But he is not 100% true, in fact he may be well below 50% right. All depends on how the credit is collapsing. Is the credit reimbursed or is it defaulted on. The former is deflationary, the second is not. WHat we know now is that bank capital has collapse because of loan defaults. But this capital is being replenish by the bailouts. This is highly inflationary in the long term, but you greatly increase the money supply.