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Strategies & Market Trends : Mish's Global Economic Trend Analysis
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To: John McCarthy who wrote (72807)12/26/2007 8:27:05 AM
From: Mike Johnston  Read Replies (2) of 116555
 
This is what i am saying up to d)

It is uncertain what would exactly happen in e) and later, it is clear that the Fed would have to peg long rates, but this is not a stretch to imagine, because the whole thing would have happened for the exact reason that they want to peg rates in the first place, because China dumping $450 billion worth of Treasuries would cause significant increase in rates.

The delay would be designed to allow China to get rid of $450 billion and avoid others front running them into gold market or other hard asset or currency markets.

Of course this is recipe for very high inflation and possibly hyperinflation.
Although i do not believe hyperinflation is imminent at this point, i believe it is likely, in fact i expect annual inflation to hit 20%-25% by 2009 and then 40-50% in the following years.
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