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User Info	Pillars of deflationists' arguments disputed; entered at 2007-12-02 01:19:01
Bozonian Posts: 19223 Registered: 2007-09-01 Saratoga Springs, New York	Inflation isn't caused only by the FED. Congress itself could change laws and open the floodgate of dollars. There are a lot of populists, socialist and communists in Congress who don't understand what's going on and will only see Americans suffering, their constituents demanding action and rich people partying it up. $15,000 for a shower curtain got one CEO thrown in prison and that was during a time of relative calm. Look for massive confiscation of wealth after the 2008 election. One big problem is most of the money out there seems to be stupid money. It evaluates based on the dollar. "We have 8% GDP growth". Oops. You didn't subract 12% inflation (Dollar Index since beginning of year) If they're blind to inflation they run to safety by selling tangibles (stocks, commodities, land etc) for paper backed by the U.S. government. They are measuring value with a shrinking ruler so it seems like growth is occurring. It's a knee jerk reaction. They think by pulling out of the market they are returning to neutral, but they are really returning to a losing position against other currencies. So be it. I'm not disputing that fact or even arguing with it. However, because the dumb money pulls out, the smart money has to also just to avoid a loss if only for that day, amplifying the move downward in tangible assets. My point here is, at what point will I6P (Investor 6 pack) decide that running to the dollar isn't a safe haven? At that point, kaboom. I suspect however that the vast majority of investors have never had the dollar fall out from under them in any meaningful way so this won't happen until total collapse is the only result. Since the bubble isn't let down slowly, it bursts. 2007-12-02 01:19:01