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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: mishedlo who wrote (62362)5/31/2006 4:23:04 PM
From: GST  Read Replies (1) of 110194
 
My assumption is simply this: No country running a current account deficit at a rate of 7% of GDP and has already racked up many many trillions in foriegn debt while running a negative savings rate and that adds nearly a trillion per year to that deficit can get away with it -- period. That is the problem with the dollar in a nushell and there is no way around it. There is only one outcome that is strongly indicated -- a far lower dollar and persistent inflation. This is not a poorly founded assumption dealing with relatively minor swings in the business cycle or with a single asset class like housing.

I assume the dollar will fall because it cannot do otherwise. Indeed, it has already fallen substantially and looks set to get much, much, much, much worse as the economy slows. That is less an assumption than it is a well established and well founded trend.
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