Daily Dose of Deflation 25Nov2008
iTulip: Debt Deflation Bear Market Update Part I: 2009 Windup - Eric Janszen
All credit bubbles end with a sudden withdrawal of purchasing power from the markets and economy that have become dependent on the massive flows of fresh credit. Debt deflations go on and on until the debt is deflated, one way or another, either by monetary deflation and debt defaults as in the 1930s or by monetary inflation as occurred between 1975 and 1980 in the US. The Japanese have since 1990 deflated debt the slow, hard way, siphoning off cash flow from households and businesses for nearly two decades to pay it all down, and in the process transferring mountains of private debt to the federal government through public spending programs. Our government is hoping to do that, too, except unlike Japan in 1990 our government is deeply in debt to foreign private and official lenders already.
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