The Black Swan (part two)

[TaoJones]

Originally Posted by johnmcntsh

One more question and and please remember I am not a rocket scientist when it comes to Finance

If a deflation spiral is really bad (ie. the great depression) and as the fed cannot really lower interest rates anymore, nor raise them, would not the only option to be to inject money into the system ( basically try to cause inflation?). And would not the fed be the first to see signs of a deflationary spiral? I somewhat see your point about the creation of hyper inflation, I just do not see where the fed has an alternative as they are the ones who would be the first to see the possibility of a spiral.

John, I'm travelling and have only sporadic internet access, so I will either post something here or send you a PM as soon as I can. I appreciate your interest.

I also appreciate your posting the link to the speech that earned Bernanke the sobriquet "Helicopter Ben." It is a vitally important item for anyone who wishes to understand what the financial future most likely holds, inasmuch as the man who composed it is at the controls now.

It's entirely possible that the 5000 character limit on PMs could be exceeded by what I would like to impart, now that I think about it. If you would like me to email it directly to you, send me a PM with your email address. I'm hoping to be able to put my response together sometime in the next week - I'm sorry it can't be sooner.

TaoJones

[maxingout]

It's hard to figure out what we should do. Put down the anchor or raise the sails?

Years ago, some financiers established two savings and loans banks. They ran one on a deflationary scenario, and the other on an inflationary scenario. The knew that one of the financial institutions would fail, but the other would make them rich. They didn't know which way things were headed, so they bet both ways.

For us regular folks, we should probably take a similar approach. Real estate and other hard assets should do ok in an inflationary scenario. Cash is king in a deflationary event. It may be smart to bet both ways.

Or you can just go sailing.