Forced liquidity does not work in reverse(smokey)

Forced liquidity does not work in reverse.	smokey	NEW 12/17/2007 7:16:28 PM
In the credit bubble years, the banks could loan $1K to a hedge fund. That $1K would then be placed in the bubble markets which would multiply that $1K to, say, $1.5K on their books. That$1.5K on their books could then be used as collateral to borrow $1.5Kto be placed in the bubble markets which would then multiply to, say,$2K on their books. There was never a much of a worry that thecollateral would be called as long as the majority of the financialmarkets fed by the credit bubble were on the rise. Any worry of defaultwas denied by the credit insurers who collected premiums and placedthose premiums into the same bubble markets. Whenever there wasa slowdown in the inflation of assets the Fed was there to inject moredebt into the banking system. This injection then acted as a respiratorto revive the financial asset inflation. The problem with thisphenomena is that this asset inflation fed by seemingly infinite creditwas entirely dependent on man's mental perception of the real value ofthese assets. If man were a totally mental creature, the realvalue of these assets and the liquidity created by the banks could riseinfinitely. Too bad 99% of the human beings on earth must live hand-to-mouth every day. Too bad 99% of the human beings on earth must work physically for a living. Too bad 99% of the human beings on earth cannot survive on caffeine and carbs. What a drag these folks are on the hopes and dreams of the 1% to mentally create asset bubbles to Infinity. Sooner or later this asset inflation inflates something that the 99% needs in order to survive. Atthat point those whom the 1% depended on to pay $1K in interestpayments stop paying on their debts in order to afford the increasingprices of that which they need to survive. At that point all the debt that created a quadrillion dollars in assets out of the original $1K comes due. Atthat point even a quadrillion dollars of credit pumped into the systemby the central banks will only pay back that original $1K. Smokey is suggesting that the Fed introduce another monetary measure into their calculations. Monetary Asset Deflation MAD for short... Tempers