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Strategies & Market Trends : Waiting for the big Kahuna

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To: Skeet Shipman who wrote (52150)	6/11/2001 1:34:19 PM
From: Real Man	Read Replies (1) of 94695

Skeet, the world currency system is a dollar system. Foreigners sit on piles of dollars and dollar-denominated investments. Central banks only have about 1 Trillion in reserves. Imagine how the money supply measures will behave if the dollar flow reverses... I would expect 30% M3 and a double digit inflation. The Fed will be have to tighten dramatically, and the treasuries and the bond market will be forced into a tailspin. The thing is, if there is a dollar panic, it will happen fast. Past currency crises show that they happen usually over a period of 3-6 months. Talk about "return to the mean" - the dollar index at 70. So the dollar is the last line of defence.

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