I gaurantee you, if US Economy goes into bad recession
the USDollar will get cut by 30-50% from here
the prevailing factor will not be money supply
it will be the failed continuation of the grand levitation
foreign confidence in our currency will be shattered
sure, much safe haven money will seek out USTBonds
but the key here will be rising costs and price inflation
eventually, this spells trouble for bonds, due to the erosion of capital
INFLATION DESTROYS ECONOMIES AND BONDS
it is coming, dunno when, but with certain detours on the path
I tend to rest in MishMan's camp, with first round going to a flight into safehaven during a recession
this will keep bonds valued high, and yields low
but as the price inflation takes big bites out of capital, and foreigners step aside from dollar-based instruments, the second round goes to rising interest rates during a horrendous STAGFLATION period
a new thought here
when the USDollar is finished dropping, or has dropped substantially, like another 15-20%, only then will we see rising interest rates from foreign CB's selling out of their huge USTBond holdings
as long as these morons continue to accumulate thru intervention, our rates remain low
/ jim |
