Meet me at the Bottom

The notion that consumer prices have to fall because of a recession is pure nonsense. This argument is rooted in fantasy and demonstrates a total lack of understanding of how money works. The more money that is made available, the higher nominal prices will go – regardless of economic growth. We have already gotten one stimulus so far in 2008. It is a good bet another will be in place for the critical holiday shopping season. A shopping hiatus during this holiday season will be catastrophic.

Also great chart in here illustrating how the dollar rally looks to be due almost entirely to GSE and Lehman brothers derivatives settlement.