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Bernanke wasnt even that good a academic Ive read all his papers they are idiotic , he really believes he can flood the system with money and stop deflation I fear the only way out is war > Date: Thu, 3 Jul 2008 04:34:47 -0700 > From: > To: > Subject: [Longwaves Forum]Debt Deflation > > > > > > > Firstly "academic studies show that changes in home prices have nearly > double the impact on consumer spending than does the 'wealth effect' from > rising or falling stock prices." > <http://64.29.208.119/linkpublisher/addarticle.asp?step=2&ContentType=4&mess > age=Bear+Thoughts+Article#_edn14> [xiv] This would trigger a further > slowdown in the economy. Secondly as pointed out by Herring and Wachter > "real estate booms often end in banking busts" > <http://64.29.208.119/linkpublisher/addarticle.asp?step=2&ContentType=4&mess > age=Bear+Thoughts+Article#_edn15> [xv] Banks which have large holdings of > non-performing real estate loans, as a result of a crash in the real estate > market, "will be unable to generate sufficient retained earning to restore > their capital in a timely manner. Instead they will shed assets, scaling > back new lending to all sectors of the economy and declining to roll over > outstanding loans when they mature." > <http://64.29.208.119/linkpublisher/addarticle.asp?step=2&ContentType=4&mess > age=Bear+Thoughts+Article#_edn16> [xvi] At that stage the US economy would > be at step two of Fisher's theory, contraction of deposit currency, caused > by a decrease in loans. > > The US Federal Reserve does identify the threat and potential dangers of > deflation, however it remains confident that it is ready and able to fight > off a possible deflation and Federal Reserve officials maintain that the > chance of a long-term deflation is very small. The Federal Reserve is > committed to stopping deflation and as Allan Greenspan stated, "If deflation > were to develop, options for an aggressive monetary policy response are > available" > <http://64.29.208.119/linkpublisher/addarticle.asp?step=2&ContentType=4&mess > age=Bear+Thoughts+Article#_edn17> [xvii] These options include further > driving down short term interest rates to a minimum level of zero, > purchasing long term treasury bonds with the purpose of injecting money into > the economy and lowering long term interest rates. Federal Reserve officials > have even mentioned such drastic measures as enforcing a ceiling on long > term interest rates effectively reducing the cost of mortgages, this would > provide short term relief to the housing bubble, however it will also act to > make it more resilient allowing it to blow up even further, making a > potential crash even more disastrous. Another option that has been mentioned > by the Federal Reserve is flooding the economy with currency by printing > money. "The fact is, though, that real deflation is so rare that central > bankers have little experience fighting it. No one really knows whether a > central bank's anti-deflation policies would work." > <http://64.29.208.119/linkpublisher/addarticle.asp?step=2&ContentType=4&mess > age=Bear+Thoughts+Article#_edn18> [xviii] > > > > Well so much for dumb theories by central bankers... I have said this > repeatedly what did the central ever really do, foster more credit on the > public, so we this allusion of prosperity... now that is all reversing and > who is going to pay the price? Well of course the middle class while some > bozo on Wall Street walks away with over 100 million dollars for almost > brining down the global banking system. > > > > > > > > > > Joseph > > > > > > You are subscribed to the SafeHaven Longwaves Forum > > To Unsubscribe, send a blank email to with the word Unsubscribe in the subject line. > > > > Find it at www.seek.com.au Your Future Starts Here. Dream it? Then be it!
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