Oct. 10

I think it can and should be deflationary, but it remains to be seen what happens. This is more than a corection IMO. What the market is telling us is that it wants pull way back. Maybe even back below the 2002 floor of about $DJI of 7200, and head for 6500, and an S&P of 750. That's just huge from where it was last year.

In a nutshell, what I'm more afraid of than anything is the Fed really turning on the valve and trying to keep this at an 8500-9000 Dow, and leave it on for a long time. Because what might happen then is they will go and try to slow the supply of new money and credit dries up all over again instead of it's correction taking place now.

http://www.reddit.com/r/Economics/comments/76h9j/peter_schiff_economy_will_face_death_by/c05t7x1

Yesterday:

Alas, you are talking to a working trader and armchair economist, and I know your misdirection isn't even worthy of a rebuttal.

Not to even mention the fact treasury yields are a poor indicator of future monetary supply anyway.

But I'll give my take for the benefit of others who would rather not listen to someone who has been wrong all year, and is pointing to deflation that precedes hyperinflation by definition and trying to tell you all that it is evidence that inflationary danger has passed.

You are confusing inflation, with hyperinflation, which is a wholly separate beast. hyperinflation is sudden, and follows a deflationary period many times.

In a recession, rates are low. Money that would have gone into stocks, corporate bonds, SBLs, and real estate will go to the Treasury. But when recovery begins, T-bonds will get sold as investors will shift to stocks. You are already seeing this IMO. That will drive up rates, cutting short the recovery. American stocks will fall. Again, and harder. Straight through the 7250 bottom in 01. The dollar will take an even harder hit. After being thrice bitten at this point sovereign wealth funds will further distance themselves from dollar denominated investments as the race to the bottom hastens.

I won't harp too much more, but many here are aware of the inflationary crisis in Zimbabwe. Not so many are aware the Zimbabwe Central Bank has congratulated Bernanke on following their lead in the crisis, as Professor Mankiw pointed out on his blog. Is it political rhetoric, sure ... but if it weren't mostly true, it wouldn't have been used by Mugabe's bankers as a crutch.

Here in Zimbabwe we had our near-bank failures a few years ago and we responded by providing the affected Banks with the Troubled Bank Fund (TBF) for which we were heavily criticized even by some multi-lateral institutions who today are silent when the Central Banks of UK and USA are going the same way and doing the same thing under very similar circumstances thereby continuing the unfortunate hypocrisy that what’s good for goose is not good for the gander...

http://gregmankiw.blogspot.com/2008/05/with-friends-like-this.html
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http://www.reddit.com/r/worldnews/comments/7krfs/chinese_banker_tells_the_american_people_you_need/1pp6