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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: bentway who wrote (257490)	6/29/2010 6:58:28 PM
From: Elroy Jetson	Read Replies (2) \| Respond to of 306849

The only safe bet I know of is the current "economic depression / deleveraging" can be postponed and made worse, but cannot be avoided. We're still collecting interest at the moment. May be interested again at Dow 6,500. With every member of the G-20 endorsing a pull-back in spending, apart from Obama's dissenting voice, it shouldn't be surprising that asset prices are quickly deflating. Milton Friedman and Anna Schwartz correctly observed that "the money supply", total outstanding debt and money multiplied by the monetary velocity, declined as the Great Depression occurred. Unfortunately those two and many others asserted the converse of their observation is likely true, yet the converse is very rarely true. The belief that "increasing the money supply can prevent an economic depression", is widely popular but false. If I observe that "my car is green", I may wish to believe the converse of that observation, "all green cars are mine", but it's very unlikely to be true. Increasing the money supply does nothing to correct the excess debt to income ratio created by a credit bubble. So while increasing the money supply can postpone an economic depression while making it worse, as Schumpeter essentially said, if you don't want the economic depression you need to avoid the credit bubble which preceded it. .