Balderdash

Predicting the Next Great Bubble

Oh yeah dude... Zimbabwe's economy is roaring!


On Jul 01 09:29 AM stocknerd wrote:

> The inflation bubble is so....so....predicted now that it can't happen.
>
> In any case inflation will not, can not happen, this year or maybe
> next.
> You must have a viable economy for inflation to happen. You need
> housing to get out of ER---mortage applications were way down meaning
> more life support for housing. Prices for homes is still dropping.
> Sales down most everywhere. Banks still need help. When housing
> prices rise in Vegas please post. No more bloody charts with money
> supply please. It is meaningless and your guess only.

Seven Reasons Inflation Won't Vanish

In response to deflationists:

Consider the following economy. Person A, Person B, and a bank.

Time 1: Bank has $0, Person A has $100 and a sandwich, Person B has $0 but a decent credit rating.

Time 2: Person A deposits $100 in Bank. Person B borrows $100 from Bank and buys sandwich from A with $100 and eats it. Now Person A has $100 plus $100 demand deposit in the bank, Person B has nothing, and the bank has a loan to B.

Time 3: Person A deposits $100 in Bank for a total of $200 deposited. Bank has $100 plus a loan to B. B has nothing. B defaults on loan because he has no job. The world is one sandwich poorer.

Time 4: Ben Bernanke gives Bank $100 for nothing so Person A gets his deposits back. Now Person A has $200, Bank $0, and Person B $0.
No sandwiches.

Net result? Twice the money and no sandwiches. Lesson? Inflation doesn't need wage growth and it isn't an equal opportunity virus. The bankers are getting free money and we're running out of sandwiches.