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From Son of FrankenMarket (June, '06): Boris Karloff's third and final role (there were many more regrettable sequels to come later) as the most famous monster of all time came in Son of Frankenstein (1939). The movie was considered credible but despite having the biggest budget, was not up to the standards of the previous two. If there is to be a Son of Frankenmarket, it will need a bigger budget as well because it will be an exercise in the law of diminishing returns, whereby more and more liquidity (inflation) is required to achieve ever-less satisfying results. In fact, this phase of Frankemarket's journey could become a slippery slope right into Abbott & Costello Meet Frankenstein (1948). Adonis
FrankenMarket
But the resulting deflationary impulse (brought about by deflating stock bubbles as greed and confidence morphed through the usual stages of denial, anger, bargaining, depression and acceptance) exposed the ugly side of the boom/bust fiat world; everything is fine as long as assets are rising. But in the dark days of 2000-2002, which included the previously unimaginable horror of 9/11, the questions became "Where will this stop? Is there a bottom?". The questions were even more profound to those who bothered to look at the dynamics of the global economy which was increasingly dependent on outsourced foreign productivity and American consumption. In a credit (debt) based global economy, Robert Prechter's now projected 'crash' simply would not do. No, it would not do at all. Enter the maestro. Enter the time tested and celebrated Doctor Greenspanstein. It can be argued that Adonis had long since begun to fray at the edges and betray an inner ugliness, but from the first jolt of credit mainlined into its veins, Adonis the wonder market had ceased to live. It was now FrankenMarket, a beast that would need ever more credit creation to keep it from turning on its masters. This market was now dependent on increased inflation to stay animated. Bud & Lou
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The
great inflation-fueled bull market had its improbable beginnings in the
early 1980's as gold was blowing off, 
Then,
in the year 2000 something changed. It turned out there was
nothing new under the sun in the 'New Economy', brick and mortar
companies actually did have value (assuming they were well
managed) and scores of dot.com and technology converts watched their
paper wealth plummet like a led balloon. By way of disclosure, I
was actually quite sweet on the optical networking sector in the late
1990's. How did that work out for me ;-)?
With
the scary mortgage and other credit/debt events - long foretold by
observers such as 
Doctor
Bernanke is now keeper of the castle. The monster is by now
staggering all over the countryside, one day falling and rolling down a
hill and the next day climbing back up again as it tries so hard to make
it back to the castle for another jolt of juice. Fully alert
public perceptions mix with a 'sell anything at any cost' mentality by
hedge funds seeking to get liquid and de-leverage. Come to think
of it, this shlocky sequel to 
I
say toward safety because after all US Treasuries, as with the
bonds of most governments, provide you with negative exposure to long
term inflation. While they can be suitable for short term
liquidity needs, there is another asset that is no one's liability but
pays no interest. People who have opted out of the casino find
value in that however. At best, treasury and government bonds are 
