The Epic American Credit and Bond Bubble Laboratory Message Board

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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory

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To: Haim R. Branisteanu who wrote (15400)	6/17/2004 12:33:04 PM
From: BEEF JERKEY	Read Replies (2) of 110194

The dollarization of the world has been a good thing all in all, so far, but especially so for the US. It has created much economic activity in the world and its better to make $4 a day in a country where $4 goes far than to sit and starve. It’s caused popped bubbles too though. The only problem is that it has resulted in huge imbalances and it is now questionable how much further the US can go into debt to "sop up" all these excess dollars the trade deficit creates in the world. The real trouble is the dollar system may come totally unglued and result in a worldwide depression due to these unsustainable imbalances. I wonder if the solution just may be inflation. Trouble there is that the dollarization has been a fundamentally dis-inflationary phenomenon. Still I think Greenspan will be very reluctant to raise rates here despite all his jawboning about inflation - I wonder if secretly he would actually welcome it as a means to "reset" the dollar system. Ironically raising rates may sink the dollar if it crashes investments like real estate, the stock market and bonds.

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