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Strategies & Market Trends : The coming US dollar crisis
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To: Real Man who wrote (1016)9/17/2007 8:52:34 AM
From: stan_hughes  Read Replies (1) of 71442
 
Maybe I've got it wrong, but my own take on the USD rising out of the aftermath is based upon it already having collapsed in the first place -- in which case I agree with you that first we need to go down before there's to be any up.

The premise being, credit crisis = lower US interest rates = lower US dollar = higher import prices = imported inflation + simultaneous inflation in domestic goods = US debt funding crisis = US treasuries forced to rise = reversal to higher US rates = eventually higher US dollar (or maybe not if it goes Weimar first before regaining respect as a currency worth holding)

All of which cannot be conceptualized without also incorporating the impact of the currently ridiculous trade imbalance, with the premise for self-correction there being more or less by the same mechanism -- i.e. US recession = reduced US consumption + lowered interest rates = lower US dollar + lower imports although at higher import prices = further reduced consumption but a preference for domestic goods = even lower imports + high agricultural prices = increased US export values = improving trade imbalance = stronger US dollar = even higher agricultural export values = even stronger US dollar, and so on

So the US ace in the hole here, if they have one, is going to be food.

Easy for me to say
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