The Epic American Credit and Bond Bubble Laboratory Message Board

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next

To: GST who wrote (75502)	12/14/2006 2:43:11 AM
From: bart13	Read Replies (1) of 110194

The relative contributions will change depending on circumstances. Money and credit supply are important, but they are now both increasingly complex and global. For the US the dollar is the major factor. The forces driving the dollar in turn are complex, but trade and financial flows are dominant -- with financial flows from government and current account deficits being primary factors. The dollar peaked a few years ago and there is little if anything to support it over the medium to long term. This sets the stage for inflation -- the only issue being how bad it will get. Monetary policy can make inflation worse, or it can help to contain inflation. At this stage you will be hard pressed to come up with any scenario in which the dollar will appreciate and there are no good policy options for the Fed. The US will suffer the fate of all economies that become too unbalanced. Japan's economy was too unbalanced -- and they tilted into deflation due to their imbalances. Our situation is the mirror opposite of Japan -- and so we are tilted towards inflation. If the earth is struck by an asteroid or some other similar event then of course who knows, but as things stand today we should be braced for a slowing economy coupled with a falling dollar and persistent inflation. Cool, and thanks! That's an answer with some meat in it, and the first answer that seems close to, if not actually, complete. I find that we're probably not all that far apart in views, and some of it is likely just plain semantics or interpretation issues. I most especially agree about the lack of understanding of the full global picture - it was the main reason I put up a Central Bank watch page, and the full project is incomplete. The only thing I would add of substance is that I think those other issues of the dollar value and the trade picture have their root causes in "excess money/credit creation"... or political decisions that caused the excess creation. Do note my quotes too - the definition of money and credit can be a swampy mess.

Report TOU Violation

Share This Post

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next