--><p class="MsoNormal" style="MARGIN: 0in 0in 0pt">Bob Prechter remarked in his
January 2003 Elliott Wave Theorist,"I have been unable to find
a published article explaining the weaknesses in the inflationists' arguments
and demonstrating that a destructive deflation is likely," and he
resolved to take on these arguments individually:"If you can't find
something you have to make it yourself; thus, this report."


<p class="MsoNormal" style="MARGIN: 0in 0in 0pt"> 


<p class="MsoNormal" style="MARGIN: 0in 0in 0pt">Here's an excerpt (from 13
pages of commentary):


<p class="MsoNormal" style="MARGIN: 0in 0.5in 0pt"> 


<h1 style="MARGIN: 0in 0.5in 0pt">"War Will Bail Out the Economy"</h1>
<p class="MsoNormal" style="MARGIN: 0in 0.5in 0pt"> 


<p class="MsoBodyText3" style="MARGIN: 0in 0in 0pt 0.5in"><strong><font size="2">"Many
people argue that war will bring both inflation and economic boom. Wars have not
been fought in order to inflate money supplies. You might recall that Germany
went utterly broke in 1923 via hyperinflation yet managed to start a world war
16 years later, which was surely not engaged in order to inflate the country's
money supply. Nor are wars and inflated money supplies guarantors of economic
boom. The American colonies and the Confederate states each hyperinflated their
currencies during wartime, but doing so did not help their economies; quite the
opposite.</font></strong>


<font size="2">
<p class="MsoNormal" style="MARGIN: 0in 0.5in 0pt 0in"> 


<p class="MsoBodyText3" style="MARGIN: 0in 0in 0pt 0.5in; tab-stops:.5in"><strong>With
respect to war, the standard procedure today would be for the government to
borrow to finance a war, which would not necessarily guarantee inflation. If new
credit at current prices were unavailable, either the new debt could not be sold,
or it would"crowd out" other new debt. The U.S. could decide to
inflate its currency as opposed to the credit supply. As explained in Conquer
the Crash, doing so would be seen today as a highly imprudent course, so it is
unlikely, to say the least. If it were to occur anyway, the collapse of bond
prices in response would neutralize the currency inflation until the credit
markets were wiped out.</strong>


<p class="MsoNormal" style="MARGIN: 0in 0.5in 0pt 0in"> 


<p class="MsoBodyText3" style="MARGIN: 0in 0in 0pt 0.5in; tab-stops:.5in"><strong>Despite
these arguments, I concede that war can be so disruptive, involving the
destruction of goods and the curtailment of commercial services, that the
environment from the standpoint of prices could end up appearing inflationary.
So the monetary result may not be certain, but an inflationary result is hardly
inevitable.</strong>


<p class="MsoNormal" style="MARGIN: 0in 0.5in 0pt 0in"> 


<p class="MsoBodyText3" style="MARGIN: 0in 0in 0pt 0.5in; tab-stops:.5in"><strong>There
is in fact a reliable relationship between monetary trends and war. A downturn
in social mood towards defensiveness, anger and fear causes people to (1)
withdraw credit from the marketplace, which reduces the credit supply and (2)
get angry with one another, which eventually leads to a fight. That's why The
Elliott Wave Theorist has been predicting both deflation and war. You cannot
cure one with the other. They are results of the same cause."</strong>


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ich komm nicht hinter das Geheimnis derjenigen US-Experten, die glauben man könne den wirtschaftlichen Karren aus dem Dreck ziehen, indem den Planeten in Schutt und Asche legt.