[raybbr]

Assuming, accordingly, that, at some point of time, a state of over-indebtedness exists, this will tend to lead to liquidation, through the alarm either of debtors or creditors or both.

My personal opinion is that we have been there for over a year yet none of the consequences Fisher claims will happen have happened. In fact, the market has grown. What are people investing in? Why haven't we devolved into the state he describes?

[dajeeps]

Why haven't we devolved into the state he describes?

Maybe because it isn't a trigger, but rather one possible effect when disinflation/deflation starts to kick in(caused by Fed tightening of money, not credit).

If you look at historical commodities and wage reports starting in 2007 all the way though 2008 you can see the numbers outpacing the growth of inflation. It means that the expectations didn't match what actually happened. The Fed put a clamp on base money in addition to tightening credit... and it over shot the mark -- or did it?

That's what I want to know. Why did it give the economy medicine that would kill the patient and then do nothing about it? We have exactly the economy the Fed wanted and no one is calling it out. Our Congress critters are clueless.