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Strategies & Market Trends : Waiting for the big Kahuna
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To: William H Huebl who wrote (53281)7/21/2001 11:53:25 AM
From: PMG  Read Replies (1) of 94695
 
I also always thought, that the cooling of the economy should almost automatically induce a deflationary tendency as goods have be to sold cheaper.

But let's not forget about foreign financing of the US economy which is (I coud be miserably wrong) about 33% (debt, not equity). There is a problem if the USD should start to fall because renewing this part of debt could become much more expensive. In that case even money expansion by the FED would be rendered partly out of effect because it would only push the USD deeper. And if that happens "investment inflation" would turn into real goods inflation as imports get suddenly very expensive.

So the FIG might only show that the $ has finally topped?

On the other hand, it seems that the fed will have big problems rising rates again as that might cause a credit crunch.

BWDIK
PMG
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