Not Weimar, but more like France in the period 1913 till the German occupation.
First, let's see who thinks the dollar will keep dropping:
1. Warren Buffet
2. Paul Volcker
3. Jim Rogers
And who else? Nobody I know (who commands any intellectual respectability) believes that a strong dollar is possible.
A perception of a dropping dollar, plus any efforts to stop it, (national or international) will force higher interest rates, as will a reluctance of other countries to take on more U.S. debt.
Higher interest rates will seriously damage both bond and stock markets in the United States.
The dropping dollar is also a simple equivalent of inflation, though it may take a while for wage-earners to demand higher pay (unions are impotent right now).
So despite what went on today in the gold, oil, wheat, copper, and other commodity markets, there is no deflation remotely possible. The most basic commodity, food, is already in short supply while population keeps growing.
The current issue of "The Economist" that was in my mail box when I got home has a 10-page section on the U. S. banking/brokerage mess. The analysis may not be perfect, but I think it is essential reading for everyone on this thread. Just reading it is an intense experience. |
