Friday, Jan 25, 2008
Repeating the mistake
NY Times: A Fear That the Cure Could Be Poison
One day after the Fed slashed its benchmark interest rate to head off a possible recession, a small minority of economists warned on Wednesday that the central bank was in danger of invoking the same remedies that it did after the bubble in dot-com stocks burst seven years ago.
Posted by sold 2 rent 1 @ 12:47 PM (371 views) Add Comment
2 Comments
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1. sold 2 rent 1 said...
If the Fed can get IRs low enough and fast enough then a reflation in the housing market is possible by the spring of 2009
The reflation would be in USD terms and not gold terms.
This would lead the way for one last bubble (the biggest ever) of our civilization.
The bubbles are getting bigger and closer together.
Add in peak oil, peak food and increasing climate change and we have a dramatic end to the decade.
We are watching Calleman's interpretation of the Mayan Calendar play out in real time.
But it is not all bad news. If we need to make a change to something completely different then we must see our existing setup destroyed.
Think of it like a catapillar turning into a butterfly.
The financial system must be kept intact long enough for us to make the change to whatever is next.
Hopefully this will happen.
2. techieman said...
s2r1 -for that to happen there must be enough income to service the debt. If you reflate (again!) then you end up with more inflation and a bigger still fall when it finally comes. Not only that but for that to happen the banks must be convinced to expand the credit. My question on this is therefore (and this is just a question - I dont know the answer) has there ever been a debt/credit deflation this big that was broken as quickly as you are suggesting? If so then it may be possible - I have often said that this may not be the final top, although ii thought it was and am becoming more and more convinced it is. I suppose in partt the answer is it depends on how it gets resolved but if the option is default then it strikes me its gonna take a while!!