Can you name a period in financial history when worldwide equities and real estate depreciated by large amounts and at the same time consumer prices appreciated by equally large amounts? Just curious.
Wrong. There was a chance of deflation, but it was stoped with low interest rates. But now we have low interest rates + dried up credit markets. There is a difference.
Well that's just simply not true.. No demand for money? Trillions of dollars have been begged for and donated...where did that money go? Into short-term bills... Why? That's the mandate... We give you money - you buy Treasuries...If you don't, then we don't give you money and you die. It's no different than BW2 - We give the Saudis Dollars for oil and they use those Dollars to buy US Treasuries. In return, we protect them militarily, and let them stay in power. The difference is that this current collapse will be very temporary and very acute. It can't last.. The long-term effects will be terribly inflationary, and last much longer than 6 months of deleveraging. The inflationary spiral is only at half-time....
T Bills are zero because there is no other place for a large company treasurer or foreign central bank to park temporary cash funds safely. Previous parking areas now considered too risky: Auction rate securities Large "too big to fail" banks Money Market funds Commercial paper Agency paper If you were a company treasurer where would you put your temporary cash now ? Jet Blue has 305 million in illiquid auction rate securities. Bet he wishes he had zero percent T Bills now!!! http://news.moneycentral.msn.com/provider/providerarticle.aspx?feed=BCOM&date=20081114&id=9379899
...begin_conspiracy_theory... This isn't about deflation or inflation. This is about the destruction of a form of monetary policy of the world - using the USD as a "reserve currency." The uncertainty in the markets is REALLY about what the hell happens next - after the "USD as reserve currency." ...end_conspiracy_theory... -gastropod
What's so retarted? You think the Fed runs the printing presses and stores all the bills in a vault somewhere waiting to send them out in the mail? Money isn't created until it's loaned.