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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: mishedlo who wrote (3185)	12/11/2003 1:53:38 PM
From: Crimson Ghost	Read Replies (1) \| Respond to of 110194

American consumers will care BIG TIME when inflation explodes

To: mishedlo who wrote (3185)	12/11/2003 8:27:43 PM
From: TobagoJack	Read Replies (3) \| Respond to of 110194

Hello mish, <<With foreigners holding all that debt, who cares if it goes worthless>> ... may not true, could possibly be false comfort, and is certainly a belief of 'Popular Economics' in the US. I believe it is safe to assume that US domestics hold most of the outstanding USD debt and much of the supposed USD assets. This is necessarily true for all large economies. As the USD declines, the global purchasing power of USD, and the relative worth of USD debt/asset will decline with the currency, perhaps with a lag, but certainly without hesitation. Put another way, everything the US domestics do would then be worth less. Such smashing of the USD standard will eventually end the entire set of well-known benefits of running the reserve currency regime. In such an outcome, the world will, by and by, move on, as it always had, and the US domestics will be left with having to sort out the resultant inflation and concomitant depletion of purchasing power, thus the decline of living standard. Printing money is simply a different form of debt repudiation, and another variety of redistribution of pain. Printing money is certainly an easy way for politicians to raise the monetary temperature of the currency regime that is full of trapped population. Foreigners, while will be hurt, are by definition not trapped. I think we can make a fairly convincing argument that the Romans probably <<WANTED>> to defend their currency system for all the benefits that it brought to Rome, but for the detail that they could not do so against the tide of history and opposed the determination of the equation of time. The folks with the highest standard of living should always WANT to defend the system that brought about that standard of living. Turning one's back on the system invites disaster. Chugs, Jay