SOS Mike Shedlock Says

1. Prices of assets falling.
2. Prices of consumer is barely falling.
3. Value of debt in zombie bank in Japan has made Japanese bank cannot lent.
4. Financial market inflated but they never fixed the economy.
5. Relapsed is expected.
6. Credit + money = money supply.
7. Fed has increase the base money supply, into banks' reserve.
8. Lending comes first and reserve comes second, Fannie Mae lent, value of loan crash, increase Fannie Mae reserve by Fed, but not reach borrower.
9. We have USD40 trillion of bad debt out there and only a few trillion in the reserve
10. Dump the dollar for Euro? Yen? Yuan? Sterling? Precious Metals?
11. China credit increase 35%. Confident restore but not the actual economy.
12. Long term interest rate in Japan is only 1%, USA is 3%. If Japan is 3%, they will go bankrupt.
13. Gold is not a hedge against of inflation but against hyperinflation.
14. Gold does well in deflation. Gold is prefer because lost of faith in debt/credit lose value
15. Inflation due to malinvestment in China/Australia
16. Solution, let home prices fall naturally, not artificially prop up.
17. QE , goal of QE2, get bank lending, spur job, stabilize housing = all fail miserably = relating back the commodities and stock market (bubble)
    
18. QE2, stimulate and speculate in commodities, looks like a success at the moment
19. One think Ben has done, drive borrowing cost so low, corporate can role over debt and keep cash just in case crisis strike again.
20. Expected in downgrade in debt and bank.
21. Will be like Japan.
    
22. Will be drift in and out of deflation & recession like Japan.
23. Another crisis for another decade.

MyView

One of the few deflationist that recommend on gold, who sees that the value of other assets being deflate (house, stocks, bonds, other paper assets). He believe another crash is inevitable due to Fed prolong the imminent crash.