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Strategies & Market Trends : Waiting for the big Kahuna -- Ignore unavailable to you. Want to Upgrade?

To: mishedlo who wrote (67526)	11/21/2003 6:25:34 PM
From: Real Man	Read Replies (3) \| Respond to of 94695

Yep. But they can keep doing what they are doing without serious consequences as long as the rest of the World fears the coming deflation. Once the foreigners shift their fear towards the depreciation of assets parked in USD, it's all over. The Fed can keep rates low and print the way they want, but that will only result in no hyperinflation as long as there is someone actually soaking up every dollar they print, i.e., deflation-fearing Asians. Japan, obviously, fears deflation the most, after spending 13 years in a financial hole. But they spent a long time there. Maybe, it's time to come out? Once the foreign fear for assets parked in USD appears, it's all over, Fed or not Fed. It will be Mr. Market then, not the Fed, who determines the direction for the economy. If they print more, they will get more inflation, with strongly negative real rates. Who will want to buy the bonds then? And, if they keep the rates low, banks will simply borrow $ and park them, say, in Swiss Francs, or in Pork Bellies, or gold, causing more of the same. They will use the low rates to short the dollar. The Fed will be forced to raise then, by Mr. Market. Cause if they don't, the dollar will collapse, and they wind up with hyperinflation. I think we are pretty close to that - the massive exit of foreign $$$. Although, I don't know - maybe, they are masachists and enjoy losing money -g-