in a deflationary environment, nobody is gonna spend, because the goods will be cheaper the next day. Economy will contract, unemployment rate will rise, etc. This is the scenario the government is trying hard to avoid.
live lobster is only $3.99/pound in NY now, down from $7.99 a few month ago, talking about the power of deflation.
US government gets too much debt in the form bill or bond. All of the promise of bill or bond are backup by its tax ability. With its tax revenue going down and debt going up, US will be in risk of default in one day by keeping increase its debt. The AAA will go CCC. Therefore US can't keep print money without thinking twice, so the deflation is one of very likely scenarios
原帖由 zero 于 2008-10-28 11:59 AM 发表 US government gets too much debt in the form bill or bond. All of the promise of bill or bond are backup by its tax ability. With its tax revenue going down and debt going up, US will be in risk of d ...
US is not printing money? FED recently just wrote down about 2 billions from those MBS it swallowed in as collateral of lending to JP Morgan for the purpose of bail-out Bear Stearns. So how do you count these 2 billions? This is printing. As government has had several major off-schedule treasury issuance and going to have more for the 700B TARP, FED has participated in the auctions and swallowed in undisclosed amount of treasuries. Where does this money come from? It's printing.
How can we profit from the scenario:mlid deflation for a few months, then mild inflation for another few months, then, (wait and see, will ask a year fro now).
狗仔卡
发表于 2008-10-28 10:17 AM
发表于 2008-10-28 11:21 AM