Mish's Global Economic Trend Analysis Message Board

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Strategies & Market Trends : Mish's Global Economic Trend Analysis

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To: mishedlo who wrote (70809)	11/2/2007 5:55:41 AM
From: Real Man	Read Replies (1) of 116555

There is a limit to the dollar drop. The US international investment position will naturally increase as the dollar drops, while that of the World in the US will decrease, at least relative to the US position. Both of these are large. Right now we owe net about 2.9 Trillion, that despite much higher accumulated trade deficit (6 Trillion?). However, I would expect foreigners to be kicking and screaming as this occurs -err - selling dollars, as they get cheated out of their hard earned green cash. For some of these countries the reserves are quite significant, compared to their GDP. The key to hyperinflation will be if BB and his Fed prove to be willing to monetarize the bad debt in huge quantities as stuff hits the fan. I tend to agree, probably not. However, with M3 growth of 15% so far I would not count on deflation, and it won't be allowed to deflate at all. After all, BB does have the printing press. They will use it. It might not be enough, and the economy will be stuck in bad debt for a long time, but they will.

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