Wednesday, November 12, 2008

Deflation today, inflation tomorrow

The bond markets are assuming that Obama will be responsible and clean up Bush's mess. But if Obama flinches, the bond markets will explode with pent-up anxiety about Bush's policies, and we'll face a deflationary economy, inflationary monetary policy, and long-term interest rates at ten percent. So watch what _that_ would do to housing prices.

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