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Strategies & Market Trends : The coming US dollar crisis
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To: pogohere who wrote (20007)4/25/2009 6:51:46 PM
From: axial  Read Replies (2) of 71455
 
Thanks Pogo; the first link didn't lead anywhere informative.

Overall Jim P and I seem to agree, with some immaterial differences.

He said,"The Fed has no control over the velocity of money, the money multiplier, the saving rate or the banks willingness to expand credit or the shell shocked consumer to borrow/consume. "

Noted, and we're consistent. My comment was that Bernanke believes (and has written) that the Fed can influence velocity. Whether that's true remains to be seen. The flip side of that (in terms of monetary intervention) is the contention that once inflation starts, the Fed will not be able to control it. That's a whole 'nother argument, which we can postpone for a while. Let's see how they do with deflation first -g-

Overall, the future will be determined by macro forces beyond the power of monetary intervention. Even though massive amounts of money will be printed, they pale in comparison to GDP. In coming years (pick a time frame) macro forces are deflationary.

Forecasts in excess of 10 years have been quoted, but even a more conservative estimate says minimum 2 or 3 years. Equally important, that scenario's not limited to the US: it's global.

It's still true that other events - unchecked collapse of other economies, a run on the USD - could disrupt any plan. There's still major economic and financial instability. Nevertheless my investment decisions will be based on a deflationary scenario.

Jim
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