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Strategies & Market Trends : The coming US dollar crisis
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To: Larry S. who wrote (6618)4/27/2008 3:33:47 AM
From: Real Man   of 71470
 
"Who is going to keep pushing commodity prices into the stratosphere?"

Central banks, as they try to keep asset bubbles levitating
and defying gravity. They have 2 tools at their disposal:

1) interest rates
2) the printing press

We are in a cycle when real assets outperform paper assets.
Central banks can't stop that process, but they can fight
the deflation of paper assets by devaluing the unit they
are priced in, thereby inflating the real assets.

The degree of commodity price inflation depends on how much
they print. If they don't print at all, then deflation happens,
and the DOW tumbles to 1000, while oil goes back to 30.
Nevertheless, oil keeps increasing relative to DOW, because
both are priced in the same units.
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