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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: glenn_a who wrote (91206)2/3/2008 11:04:05 PM
From: GST  Read Replies (1) of 110194
 
The bursting housing bubble weakens the dollar -- the value of the dollar is far more important than US demand in determining US inflation rates.

As for the central role of US demand in the minds of most Americans, any example will do -- but start with this one: the US accounts for 12 of global copper demand -- a 20% drop in US demand is a 2% drop in global demand, and that is easily made up for in booming global growth. US demand matters, but is not decisive in the way that it once was. What is decisive is the dollar, and the bursting of the housing bubble is a dead weight on the dollar. It drives up the US dollar price of everything traded on global markets. You might need to think about this before it sinks in -- the housing bubble is just one more nail in the clownbuck coffin.
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