polifrog
During the market crash in late 2008 and the ensuing government measures I wondered: Inflation or Deflation? The actions seemed inflationary at the time. This clearly has not been the case... If the deflationary pressures are great enough, can the Federal Reserve actually win a deflationary battle and more importantly can the Fed win a war of attrition with deflation.
Via SafeHaven .com:
The normal economic stabilizers have been firing full throttle for nearly two years, and some of the propping up of home prices through purchasing incentives and Fed induced low interest rates through Quantitative Easing are coming to an end. The gains have been minimal and the fact that the fuel behind the stabilizers is running low has to make one wonder...what next?
The Great Depression had a second leg down......
out
During the market crash in late 2008 and the ensuing government measures I wondered: Inflation or Deflation? The actions seemed inflationary at the time. This clearly has not been the case... If the deflationary pressures are great enough, can the Federal Reserve actually win a deflationary battle and more importantly can the Fed win a war of attrition with deflation.
Via SafeHaven .com:
The CRB quantifies the fact that ill-conceived money printing and socialization of "too big to fail" investment losses generated almost zero economic traction, and that the "coordinated" monetary effort can only be characterized as a failure of historic proportions.
...
Why did this central bank effort fail so spectacularly? Why not one hint of hyperinflation? Simple. The credit bubble was imploding (and continues to implode) and credit losses sustained worldwide faster than the sum total of all additional artificial money created.
The normal economic stabilizers have been firing full throttle for nearly two years, and some of the propping up of home prices through purchasing incentives and Fed induced low interest rates through Quantitative Easing are coming to an end. The gains have been minimal and the fact that the fuel behind the stabilizers is running low has to make one wonder...what next?
Real estate's own relief rally has been built on historically low interest rates, massive government subsidy including socialization of mortgage losses, socialized refinance giveaways and buyer tax incentives, the banking industry's wink-nod holding off on foreclosures ("extend and pretend"), and the corporate media's daily hypnotic suggestion ("you're getting sleeeepy") that the bottom is in. But take a moment to ponder this: What if mortgage interest rates stood at even 8 or 9%, Federal and state real estate tax incentives never existed, the Fed and Treasury left mortgage debt issues to the market to contend with and foreclosures were brought to market without delay? The answer is that values would probably have sustained another 50% haircut right off the top. But governments can only prop up markets temporarily; in the end, it's all about gravity. Finding a true free-market bottom will be a slow and painful process, and history will show that everything the government and policymakers attempted to do to keep the bubbles afloat ended up making everything that much worse.
The Great Depression had a second leg down......
out
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