Mish's Global Economic Trend Analysis Message Board

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Strategies & Market Trends : Mish's Global Economic Trend Analysis

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To: glenn_a who wrote (8694)	7/10/2004 10:07:29 AM
From: Perspective	Read Replies (5) of 116555

An excellent post! I'm sorry it took me so long to read it. I haven't heard much emphasis on the last global currency transition, and that is a fine point. I hadn't realized the role that the 1920s currency imbalances (ie bullion flows) had played in fostering the bubble of that era. That does sound strikingly familiar. In my recent K-wave ramblings, I was just waking up to the fact that the whole deflation/inflation debate is the wrong way to look at things. The real question is deflation or reflation. When debt levels have become so high, they become self-limiting and launch K-winter. A key identifying trait of K-winter is the anticorrelation of stocks and bonds, which clearly started in 2000. Then, investors should focus on Winter themes (ie go long bonds, avoid stocks, accumulate commodities on dips) but be on the lookout for Spring. I also realized that the Winter-Spring transition is the most treacherous for the investor as ALL major asset classes reverse direction! Note that this is not true of Spring-Summer transition - commodities remain excellent long plays through all of Spring and Summer, and bonds should be shorted throughout Spring and Summer. BC

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