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

To: mishedlo who wrote (97313)	5/8/2009 8:19:54 AM
From: SouthFloridaGuy	1 Recommendation Respond to of 116555

Mish, the Fed is winning the battle, but I agree they cannot win the war. Too many 'crack-up' booms and you end up like Argentina. They are currently creating enough money, whether it be temporary repo or outright printing - it doesn't matter right now - to counteract the contraction in consumer credit and offset deflation. However, deflation is the last battle, and I think it's pointless to discuss it other than in theoretical terms for now. The next battle is a vicious commodities inflation which may make 2003-2007 look like a walk in the park. At first it will look like recovery and will not translate into higher end good prices because there is too much slack in the global economy. Many global markets such as Brazil will hit new highs and go even further, IMO. But the inflation effects will be soon felt because capacity utilization in the commodities space is still quite high due to years of underinvestment and an unprecedented amount of capacity that was shut down during the current crisis. At some point, the Fed's shell game will run out because the ultimate barometer, Debt/GDP must fall. Short-term solutions to long-term problems never work. Party on.