Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Wyätt Gwyön who wrote (13202)	10/9/2004 7:12:55 PM
From: russwinter	Respond to of 116555

I'm debating the Dollar collapse effect on one follow on aspect of the Bust, the Giant Reflux back to Asia. If the USD gets dumped during this Reflux process you could then get the classic Ludwig Von Mises Flucht in die Sachwerte (flight to real goods) or "crack up boom". In that scenario a real panic develops to get rid of all these Dollars (Old Maid Cards) and other currencies (the Yen for example) that have been printed up ad nauseam. That's a tough, difficult environment to guess about outcomes, but some or many commodities in USD terms could go higher, even in an economic Bust with lower demand. So the effect might not be deflationary at all for many real goods, but only for financial goods (including housing) dependent on plentiful, unobstructed USD based bubble credit. Deflation in the credit bubble sector could get real ugly. I suppose one could construct a whole commodity model around variables like economic sensitivity, and unintended supply side consequences such as difficult financing for mines, or energy development. Ironically, I doubt if anybody has done much modeling, or even given a crack up boom much thought, so there might be some opportunities for the aware? You have some USD priced commodities like food, that are subsistence items and may not be affected in relative terms by an economic Bust at all. I would imagine that if a Giant Reflux and Dollar Dump unfolds, precious metals would be the no brainer KISS beneficiary. Among currencies much would depend on who really stepped to the plate and aggressively defended their currencies against melt down. Who knows, Greenspan may be gone by then, and a Volker type might be in Oz's place? In the German inflation in the 20's they were actually able to put the horses back in the barn and restore the currency through draconian measures like higher interest rates, so currencies can evidentually be saved if proper steps are taken. Your thoughts?