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B4 The Bell, Frieday, Jan 30


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A deflation is never caused by debtors suddenly stopping to finance debt with more debt. There is no limit to the amount of debt that the distressed debtors are willing to take.

 

Deflation is caused by creditors pulling the plug on a whole economy. It happens when banks do not lend anymore because low interest rates do not cover the risk. It happens when savers take their money from the bank, because the bank is technically bankrupt. It happens when foreign banks stop buying treasuries to keep the dollar propped up.

Well put. I think this pretty much explains why Japan is having such a hard time inflating its money supply. In Japan, banks are crippled, don't want to lend, and would have a hard time finding a good creditor if they did.

 

It is somewhat ironic that $ intervention has given the BOJ something new to monetize. Even with that, they still have difficulties expanding the money supply.

 

I favor what MH says in the inflation/deflation debate. No doubt rising interest rates would trigger a panic unwinding of Treasury and other positions. But would that be enough to plunge us into a depression? Perhaps we could survive a small increase up to 2%, but I would think there would be dramtic readjsutments if rates went to 5% say to stop a dollar plunge.

 

jrmfl - will have to check out your post this weekend.

 

Tanks all.

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no borrows on BZH... in fact i've seen the crooks tighten up borrows on a lot fo crap. squeezer od deck as bill miller etal are whack back office desks with returns.

 

bastids.

 

HB it's going to depress the hell out of you... fair warning.

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JR- I'd say the article is spot on and yup it is depressing. Here comes the move folks!

disturbing... believe we're gonna chop into month end and feb's when it gets

a little nasty.

 

but i think by the end of next week, we may want to be looking for an st bottom.

 

the fed's got control of this mess for now and no blow ups into G7.

 

the ecb prefers the euro conitnues to rise, just not at a rate that alarms

the rest of the globe.

 

at some point it's going to weaken, but they are as desperate as desperate gets.

 

i'm ready for anything.

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