An interesting read: (that thread was active at one time, with very interesting contributions)
Message 14929641
The direct link to the article:
prudentbear.com
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One of the reasons the USD has continually confounded its critics is that there is simply no consensus as to where to hide from its influence. All paper currencies are vulnerable, most equity markets are still historically rich, many societies have become overburdened with debt. The system has no anchor but the USD itself and the corruption of money per se means that ‘managed’ currencies are nothing but a euphemism for competitive devaluation by stealth, that the free riders end up driving the bus.
Against such a backdrop, it might require a series of major blunders on the part of the US authorities, or a series of misfortunes restricted to the American economy alone, to begin a fracture in the linchpin. It would need the bravery to accept an appreciation of one’s own exchange rate elsewhere to see the trend reversed. Do you think the British would not respond to a US-led slowdown by clamouring for monetary relaxation in the UK, that the Europeans would not switch to even more stimulus, that the Swiss would not go with the ’counter-cyclical’ tide?
Stay with major government bonds for now while the initial manoeuvres unfold and the troops are marshalled. If equities give way on a big scale, the need to bail out banks will reward you immensely. But, if lesser credits begin to stabilize and equity breaks the Bears’ hearts once more, be quick to shift. Your cheapest equity call is a put on bonds, financed out of your gains to date. Remember that resources are already scarce and wages and rents are rising along with fuel. Consumers’ psychology is shifting and if they are spared pain, they will spend the newly-minted cash quickly. Barring a recession, we will witness the Death of the Death of Inflation.
If central banks win once more, this time they are likely to deliver up the worth of fixed income assets to an inflationary aftermath whose flames will make the bond crash of 1999 look tame.
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