In the US we face a potential decline in demand combined with an increase in prices. You simply deny that it is possible for prices to go up if demand is going down. Not so.
I am really getting tired of being misquoted.
Show me where I ever said that.
For Christ's sake how many FN times did I talk about peak oil, bean blight, drought or whatever?
The source of the increase in prices has been pointed out repeatedly -- it is the declining purchasing power of the dollar. You truly do not appear to grasp the idea that there is a market for the dollar and that a decline in demand for the dollar can increase our interest rates, stall our economy and raise our import prices, all at the same time.
I am well aware of tne falling US$. I am also aware of crude that has gone from $25 to $64 with hardly any passthru. You can not grasp the concept of taking a direct quote I make and rebutting it. Instead you like everone else attempts to state that I say things I did not. I have explained many times how the US$ can drop and prices drop and the answer is simple: overcapacity in conjunction with demand dropping faster than the US$ drops. Now you can believe that or not. I do not care. But damn it, I am getting FN tired of being misquoted or people suggesting that I do not address questions that I address over and over and over and over and over and over and over. And to suggest that I do not understand a falling dollar is totally nuts as well as a piss poor representation of what I have stated.
The market for the dollar is likely to go into a tailspin in a housing bubble deflation, and the number of dollars it will take to buy anything from a person outside the US is likely to go up.
Likely or will and in whose opinion? By the way, why should I give a rat's ass about how many dollars it takes to buy something outside the US anyway?
Rising interest rates are also increasingly a function of currency risks and less a function of the market for goods, as you assert.
Where did I ever assert that interest rates are based more on the market for goods than currency risk? I recall no such statement. Please point it out to me. One of the biggest factors that makes one currency more attractive than another is interest rate differentials, another would be growth, another would be inflation expectations and other would be saftey (as in no one is likely to invade the US). I really am tired of you sticking things in my mouth.
The currency markets are dominated by the debts we have already racked up that need ongoing refinancing even if we buy nothing more from now on. You speak as if the US was a relatively closed economy going through a pretty standard asset inflation-deflation cycle. This is somewhat naive in my view.
I defy you to point out where I said or even suggested the US was a "relatively closed economy" or for that matter that this was a normal cycle. This is not a typical cycle. The excesses of this cycle exceeded every other cycle to date. Normally these end in a deflationary bust and I fail to see why it's different this time. Once again you show piss poor understanding of my position.
Stagflation is the most likely scenario in my view. The fact that we will have fewer dollars to spend does not mean prices will go down -- it means living standards will go down. It means we will be poor, with deflated assets, and debased currency and a ton of debt to work our way out from under. We are the world's trailer trash.
You are entitled to that view and it does not bother me one bit that you have it. In fact I would prefer to be the only person that sees deflation coming. But although you are entitled to your view you are NOT entitled to misstate mine and the butcher job you just performed was one of the worst misrepresentations of what I have said than anything I have ever seen.
As for stagflation....
Mish:
Stagflation is a wimpy term that Gnazzo did not address but is generally used to describe rising interest rates and a stagnant economy
You:
No, it refers to an economy that has stagnant or declining aggregate demand combined with declining currency purchasing power.
dictionary.reference.com
1) Sluggish economic growth coupled with a high rate of inflation and unemployment.
2) An economic condition that is characterized by slow growth, rapidly rising consumer prices, and relatively high unemployment.
3) a period of slow economic growth and high unemployment (stagnation) while prices rise (inflation)
So exactly what is your glorious correction to the definition I presented all about? Interest rates normally rise in response to inflation do they not? If you want to nitpick over items I suppose you are entitled. If you think that the prices of cars, houses, appliances, TVs, or damn near anything else are going to skyrocket up in the face of a housing bust and falling employment then I can't stop that either. You are entitled to your viewpoint.
OTOH I do not think you have fully come to terms with the affect of a GLOBAL bust as opposed to something local to the US, nor do I think you understand the affects of a severe nation-wide housing bust either. That is my opinion and I am entitled to that as well but at least I do not go around misquoting you or saying you do not understand what a falling dollar means.
Mish |
