Monday, January 21, 2008

Asset prices are plunging. First Real Estate, now the world equity markets.

This looks like DEFLATION to me, and I am losing (lost) faith that the Fed can re-inflate.

Monetary deflation coupled with commodity price inflation (though commodities may not be inflating again for sometime) is about as bad as it could have been. America, welcome to Japan, circa 1990.

You will read and hear a great deal of specious cause and effect explanations from the media, for most of which the journalist engaged in perhaps 30 seconds or so of research before trumpeting their findings to the public.

Here is one cause and effect you will not see in the Main Stream Media:

The energy complex has been unable to deliver increasing amounts of BTU's in sufficient quantities to maintain economic growth.

For my money this is THE cause and effect.

Mentatt (at) yahoo (dot) com

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