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AS it becomes easier to obtain credit, people are finding ways to utilize this
phenom to spend their way to heaven. Then chapter 7 and we begin all over
again. Who is paying for this and who is taking the loses? The majority of
those bankruptcies are from people with incomes in excess of $100,000 per year.
That means that the more affluent in society have found a way to rip off the
banks and do it legally. They figured out that what the savings and loans did in
the past is now available to them. Spend and borrow your way to a grand life
style and let someone else pay for it. Ira.
BOTTrader@xxxxxxx wrote:
> The whole idea of whether or not gold or oil or some other commodity is an
> "inflation predictor" is, IMO, missing a more important point..... 1)
> "Inflation" as it is classically defined has to a great extent become
> history due to: a) post-Friedman central bank monetary growth controls
> Worldwide b) Greater levels of fiscal controls, especially the ERM standards
> which the entire world now effectively has to shadow c) the "New Paradigm"
> of the business cycle which is that, instead of "boom bust", we now have slow
> growth & soft landings, meaning that as a cycle ages, interest rates have to
> FALL to continue to stimulate demand (exact opposite of having to rise to
> choke off an inflation boom in the pre-Friedman era ). BOTTOM LINE: The
> likelihood of any sort of threatening "run-away" inflation is practically
> zilch.
>
> MORE IMPORTANTLY, instead of using the term "inflation" to describe the
> inferences of price increases in commodities, we should substitute "economic
> expansion".... simply stated, an economic expansion (USUALLY) implies, or at
> least threatens an Increase in DEMAND FOR CREDIT, which all else equal
> implies rising interest rates... REGARDLESS OF "INFLATION". This scenario
> is further complicated by the fact that as an economy expands, MORE CREDIT
> BECOMES AVAILABLE - as profits and wages are deposited in the local lending
> institutions. If credit is expanded at a rate equal to or slower than those
> deposits, interest rates can actually fall in the face of rising economic
> activity.... EXACTLY what we've seen in the United States since the 91-92
> recovery began. It's not inconceivable, that as Asia revives, their lending
> system will dole out credit very prudently (in contrast with recent years
> past), and over time interest rates can decline even as their economies
> revive.
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