Thursday, Apr 17, 2008
It is the Debt, Stupid! (That will dictate the direction of the inflation rate).
Market Oracle: US Actual Inflation Trend Heading for Stagflation or Deflation?
The housing bubble postponed the deflationary depression of the Longwave and its burst will usher in the inevitable. The incessant interventions from the Fed and the USG will dampen the severity but they will also prolong the depression by postponing the adjustments that need to take place, especially, 30-50% drop in home prices, nationally, and more in the bubble areas. “Bankers' mischief” (imprudent loans and financing) never fails to bring on economic and financial “catastrophes,” according to Schumpeter. Needless to say, the “bankers' mischief” attained new heights in recent years. One wonders what the Fed and the USG were doing. Isn't it amazing that these things get worse over time in subsequent cycles? Crooks learn from history (how to do it) and the general population doesn't
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