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The financial system - it's completely fucked, isn't it?
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TheBear
TheBear
981 posts

Re: The financial system - it's completely fucked, isn't it?
Feb 16, 2009, 14:09
Thank you for the great post.

Yes, I agree it does currently look like deflation, but I'd wager this is short-term deflation. The amount of toxic debt out there seems to me to be just too large which, politically, means that governments (being some of the largest debtors of all) will opt for the "easy" option of "quantitative easing", i.e. inflating the money supply.... resulting in inflation. Which, according to the Austrian School, is an increase in the amount of money around, not the price of things or assets. Prices subsequently increase to reflect the abundence of new extra money... but hey, you knew that :D

Agreed that asset prices such as houses and shares are currently falling, but they were massively and stupidly overpriced anyway, reflecting little or no relation to any underlying real productivity (certainly none in the case of fantasy house prices!). Check the price of gold recently! Nice one Gordon! :D

Mind you, all this depends on whether the Chinese or Japanese as major holders of US debt will allow their "investment" to decrease in value - that will be interesting!

Thanks again for your post - off to stock up on more beans :)
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Re: The financial system - it's completely fucked, isn't it? (stray)		 Replies:
Re: The financial system - it's completely fucked, isn't it? (PMM)
Re: The financial system - it's completely fucked, isn't it? (JasonJones)
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