The coming US dollar crisis Message Board

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Strategies & Market Trends : The coming US dollar crisis

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To: gregor_us who wrote (22034)	8/14/2009 4:10:03 PM
From: Wyätt Gwyön	2 Recommendations Read Replies (1) of 71463

re: your post on another thread... Yes it's very much a sucker's rally if one casts the action within the framework of previous market and economic recoveries. no, it's actually way beyond any previous market recovery, except 1930. which is why i mentioned it. i think there's a good chance of serious unfinished business on the dwnside, though it may take a few years to take out the March lows. My model remains that deflationary conditions in the economy trigger reflationary policy responses thus killing the economy and triggering further bouts of deflation.* what's actually scary is that everybody seems to believe this (including me). mostly it's just quibbling about the timing. personally i think China is a huge credit bubble which will crsh and bring down commodities and other risk assets. i'll worry about hyperinflation later, but in the meantime i like a decent bond position (and gold position, of course, in case i'm wrong ;-). And that we've been doing that dance since 2000. Price action of assets oscillates around that system.* more than oscillation i'd call it a downward spiral. things are much worse than they appear! It's weird to think about but we have built a high volatility inflation-deflation system now, not a stable system. or, the instability of stability. the CDS disaster was built by leveraging huge sums under the assumption of continuing stability. one of those dudes like Hayek said stability is dangerous.

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