"The US will try to regain some manufacturing power that will
hopefully stimulate the economy for the next generation."
Unfortunately, almost none is left (10% of the economy, down
from 20% of the economy in 2000). In case of rapid fall of
the dollar manufacturing won't prosper; it is much easier
to make money on inflation during hyperinflation cycle
than it is by actually producing something. Thanks to the
Fed, the whole country has been engaged in asset speculation
instead of production. More of the same happens during
hyperinflation. Manufacturing then is completely brought to
a halt. CEOs of these companies are engaged in speculation in
raw materials and finished goods instead, cause it's a lot
easier. So, it all depends. If the dollar really dives off
the cliff, manufacturing will die before it is reborn.
The whole country is brought to a halt, and goes to the
poorhouse. While assets continue to appreciate in nominal
dollar terms, they will drop enormously in real terms.
Is 1000,000 DOW really good, if a loaf of bread costs
$1000,000?
We are now getting into chronic inflation zone (10% a year
inflation, CPI lies subtracted), which is sure to accelerate
dramatically if the dollar crisis hits. Returns on all
assets are significantly below this real inflation.
The Fed behaves like John Law, so it will end up like John Law
- the dollar will be worthless. So, why did they remove M3
printing report in March 2006, if they are such brave inflation
fighters? |
