<<in that setting you'll only see inflation in imported goods>>
this is obviously where i continue to part company w/ you and Tip and others. if our relative purchasing power falls (due to declining dollar) [which, please note, i think WILL happen] then we can no longer purchase as much of the sh8t that we currently buy. right now we are running a $500 billion trade deficit; if i remember Roach correctly 75% of China's GDP growth last year was export growth. anyway, if we are buying less sh8t, what the heck is gonna happen to the price of that sh8t? since nobody else in the world can take up the final demand slack, the price of that sh8t will FALL, 'cause China has to run 8% GPD growth just to run in place (due to population growth / movement) and Europe has to pay the socialist tax machine. other countries will wreck their currencies as fast as we wreck the dollar.
<<Bonds may be up, but lest we forget, the anti-dollar is also up nearly 30% in the last 2 years>>
yes, i am well aware of that. i also vaguely recall predicting just such an occurance a year ago, when i argued here and on CFZ-e that gold could and in fact would increase in value in a deflation, since it is the anti paper asset.
while the Mogambo Guru is busy looking for conspiracy theories ("it is IMPOSSIBLE that bonds and gold can both be up at the same time, so those bond investors must be farking morons (despite the fact that they are the masters of the universe with $billions of wealth and i am a nutcase writing a ridiculously repetitive (though funny) web site); it is IMPOSSIBLE that bonds can be up when the dollar is falling, so just wait those stupid foreign investors will figure out the scam soon enough and leave and trash our rates") i am busy looking for an internal consistency that might explain how all these markets might in fact be more or less correctly priced.
maybe (likely) i am just a lucky Forrest Gump-ish investor and the fact that treasuries are UP, gold is UP, and the dollar is DOWN, all of which i argued a year ago was an internally consistent result, has nothing to do with analysis and everything to do with the fact i'm gonna get destroyed in the next 6-12 months. i have always focussed my investments in treasuries, and not in gold or in other anti-dollar currencies, because i understand treasuries and i don't understand (or particularly trust) gold shares and foreign CEFs and their management teams. of course, my treasury bet has largely run its course, which is why i continue to occassionally solicit opinions on gold shares and non-dollar CEFs (even though i'm sitting on a huge loss on the one i did decide to buy <g>).
all in my (generally not so humble) opinion, of course.
Cheers |
