Value:
Couldn't agree more with your excellent comments. The globe has indeed been flooded with both Treasuries and greenbacks, which is indeed inflationary. I also agree that the US buck will likely suffer further as currencies shift in recognition of the above.
The tough thing for all of us is to put this ugly situation into some sort of global context, which is not easily accomplished and which will lead each of us to a broad variety of dissimilar conclusions.
From my perspective it appears that in spite of the massive effort by the Fed (and most other central banks) to "reflate", the forces of deflation just don't seem to abate. As noted previously, I see this most evident in employment, particularly in the US (although it is every bit as worrisome a problem in many other jurisdictions). In the US, average wages are not rising (which exacerbates the impact of rising prices (inflation) on our daily lives) and well-paid jobs are disappearing at an alarming rate. To maintain their living standards, far too many folk have resorted to borrowing against their homes. I worry that the pricking of the real estate bubble (probable before next spring) not only ends this practice abruptly, but also further thumps employment (construction has contributed a large percentage of the replacement jobs over the last few years). Fewer jobs and no ability to "refinance" equates with plunging consumer purchases. In a globe that is already overly dependent on the US consumer, such a scenario could spark a classic "deflationary spiral", particularly given the global manufacturing capacity glut.
Believe me, I hope that I am completely in error with respect to the above-noted, as once critical mass is attained, a depression is a very difficult thing to reverse. Nor would any of us enjoy living through a Weimar-Republic-style bout of hyper-inflation, which could also occur, given current central bank mentalities. Time will tell.
Best, Earlie |
