Thursday, June 22, 2006
The reality is that excessive credit and money supply is inflationary
The most important asset that stands behind this debt nightmare is the housing market, which in America is crumbling. Chickens are coming home to roost and debt deflation is likely to be hatched from their eggs. Once the loose credit process goes into reverse, and we think it has already started, then the suppliers of credit will gradually remove themselves from the market and anybody out there who wishes to continue to monetarise their debt won't be able to. Instead they will unavoidably default and the truth will be out.