"Asset inflation. All that money as a result of the increases credit
expansion has gone into asset inflation. Bizarrely high salaries of CEO's.
Ridiculous stock option packages. And first and formost, the dizzying
expansion of share prices in the stock market. This is where it has all
...What happens when it comes out of the markets? The same thing that would
have happened if it had not resulted in an asset inflation in the first
place. It will result in inflation in goods and services. In other words,
inflation will come back. If the stock market deflates, in a big way, and I
believe it will, inflation will come rip-roaring back as the flood of debt
('money' created by credit expansion borrowed into existence) comes rushing
out. Not a creep-up in inflationary values. It will come back with a
screaming vengeance like never before. It is going to make the Weimar
Republic look like a week at Disneyland." - Paul Milne
Paul, I humbly disagree with you on this point.
During the market decline/crash and simultaneous Y2K, liquidity will
evaporate, credit will be nonexistent/expensive. Banks will suffer, mortgage
companies will suffer.
Today many investors have paper gains which they use as colaterral for
loans, there is very little cash used/available.
Tomorrow, decreasing equity values, increasing interest rates will mean less
credit card purchases, less new mortgages/refinincing. Lesser ability to
Individuals will not be able to borrow to continue consumption at current
pace. Property values will crash, equity values will crash, deflation will