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

To: pstuartb who wrote (282772)	10/12/2010 11:56:04 PM
From: Skeeter Bug	Read Replies (2) \| Respond to of 306849

pst, the concept is like this... 1. we are in the largest credit ponzi bubble in history, starting in 1982 - at the very latest. 2. during credit bubbles, multiple claims to the same physical asset are created (eg, 100 people think they have the claim on a single asset). 3. in short, the pieces of the pie stay the same size, it is just that 100 people think they own the piece of the pie. this is different from inflation where the actual pie pieces get smaller and smaller. the magnitude of this is astounding - in 1970, the credit default swap market (maybe derivatives in general) was ZERO and not it is 1.6 quadrillion - EVEN THOUGH ZERO REAL VALUE WAS CREATED. 4. when the credit ponzi bubble collapses, only one person will end up owning the underlying actual physical asset - the rest get wiped out and get nadda. credit spends as money on the way up, but not on the way down. this is deflationary (money supply deflationary, supply and demand may drive some prices up high while the money supply contracts). 5. the reason the dollar will be the strongest currency is simply because most of the debt is denominated in dollars - people will desperately need dollars to deleverage and pay down their debt. this happened in 9/08, but that was a small example of what will happen when people really start paying down debt. excluding defaults, almost nobody has deleveraged. yet. they will. by the tens of trillions before this is over. in the meantime, the insiders will create volatility in order to manage perception and profit from insider trading. if bernanke doesn't issue more debt, the system collapses upon itself. if bernanke issues too much debt or the market loses confidence, interest rates spike and $10 trillion in debt defaults, the economy collapses, people still working hoard cash to pay back debts, etc... debt deflation by definition. bernanke is trying to stay in the center... but that range is continually shrinking as time moves on. once the deflation hits and the bond market is blown to kingdom come, THEN serious to hyperinflation will ensue. by then, though, the banksters will have bought up everything with all their valuable cash.