Question: Inflation or Deflation? Answer: see below

[dixiegrrrrl]

http://market-ticker.denninger.net/archives/P1.html

Deninnger says deflation, and shares his reasoning.

" Once you start borrowing to pay current costs and interest - that is, you start "rolling forward" debt such that the amount outstanding increases as a percentage faster than GDP increases and this "rolling forward" shows up in asset prices, you are doomed to a deflationary credit collapse.
The longer you let it go on (or try to force it to go on) the worse the collapse will be.
This is mathematically certain - it is no more subject to avoidance than is the fact that you cannot "get" energy - you can store it, transform it or use it but each and every transformation will lose some of what you started with.
Likewise, once debt is taken on there are only two alternatives: PAY IT DOWN OR DEFAULT IT.

Unfortunately in order to "blow a new bubble" to take the place of housing you'd have to find something that was $10 trillion in size or more.
There isn't any such thing, which is why all of these "alphabet soup" games aren't working and won't."

[GeorgeGist]

1. Repossession of unearned wealth would easily cover $10 trillion or more.

[girl gone mad]

2. It's hard to take inflation arguments seriously right now..

with so many deflationary signs still present. British Airways just asked its employees to work for FREE up to one month a year (talk about wage deflation). Housing prices are still declining. Banks have drastically cut lending. Unemployment is still climbing (I don't believe that this is a lagging indicator in this consumer driven recession).

[FlyingTiger]

4. ...unless it's inflation that's CAUSED by continuing deflation.

Like this:

How Hyperinflation Will Hit America

[pokercat999]

5. I read today housing starts are moving up. Some see

this as a good sign. My guess is that you can now build a home cheaper than you can buy one in all but a few places. The cost of housing, while falling dramatically in some places (ca, nv, fl and az) still remains unrealistically high in most others. That and people that might want to sell are upside down on their mortgage, even those with prime fixed "good" mortgages.

[whyverne]

3. I don't see how there can be inflation when

so few have any extra money laying around. Can you call it inflation if prices go way up but nobody buys anything?

[Name removed]

6. Deleted message

Message removed by moderator. Click here to review the message board rules.

[FlyingTiger]

7. Gosh, thanks, Mr. Spam. n/t