I didn't mention gold or the dollar in the discussion. On the former, I hate to say it, but the notion that the asset inflation has already happened means that gold may remain mired for a long time. If anyone has histories of gold pricing running back to 1900, I'd like to see its historic behavior. I think it will rise as the dollar declines, and if that causes a rush out of paper assets into it, it could pick up some momentum. I'm also wondering if the gold carry trade is ever going to unwind, or if it has already. Anybody got any thoughts there? Seems like the breakeven point on the carry trade should have been hit already, although maybe it requires the stabilization of interest rates and an end to capital gains in bonds before the trade unwinds.
On the dollar, I see it finally getting back to reality. I see this as the turning point that topples our national superiority complex. I think Europe and Japan will ultimately be the first to recover from this period, primarily because Japan is closer to having purged the system, and Europe isn't nearly as dependent upon globalism as the rest of the planet. They have a fairly stable economic system, and while they are not insulated, they should fare better.
While I hadn't folded the currency ideas into my theory, I don't think it will impact things too greatly. Since the US is the world's consumer, the defaltionary global environment should help the US dollar retain real buying power even as it fades with waning interest in US investments.
I don't see technology having contributed in a big way to the unique nature of the monetary creation. However, I would entertain the idea that the use of stock options to sop up all the 401K inflows may have added to the concentration of money at the top.
BC |
