bernankes surprise ... gary north article, page-3

all too complex for watso to understand

from

http://seekingalpha.com/article/60261-all-signs-point-to-more-inflation?source=feed ...... and a good read

".... Once a deflationary spiral starts it is very difficult to stop as the policy markers in Japan can attest. The quote above highlights falling prices of assets and a decreased incentive to invest. We will cover their economic implications in our discussion of the wealth effect below..."

some themes in the article - lower house prices - then people spend less, borrow less - ie economy slows down, people are out of work blah blah blah.

indeed, with the economy slowing down, it may well be that there is lower demand for the m1 money supply - so taking it out of circulation is not a real big issue - but then again, watso is little old watso, sitting in a room in perth and thinks about what shop has the coffee on special - so what would he know (probably about as much as the people who allowed the sub prime mortgage market, create a right propper mess)