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Strategies & Market Trends : Booms, Busts, and Recoveries -- Ignore unavailable to you. Want to Upgrade?

To: TobagoJack who wrote (54327)	10/18/2004 3:10:17 AM
From: Maurice Winn	Read Replies (2) \| Respond to of 74559

Jay, if the measuring stick is shrunk, then people holding said measuring sticks, who have been diluted, will indeed ditch those promissory notes for something more permanent, such as furniture, a holiday, land, a business, some shares, some commodities, maybe even some Aztec relics and no doubt something really valuable, such as the creation of It via those super duper phragmented photons by QUALCOMM. To keep people holding the pixelated promises will require a higher interest rate when they see continuing decimation each year of the length of their financial measuring instruments. They will NOT want to see their financial willies dwindling before their eyes. They will demand restitution by way of increased interest rates which they will get, or the ever-shrinking dollars will be treated like unwanted hot potatoes to be quickly passed on to the next sucker before there is further devaluation. As you say, bonds will be shriveling in a pulverizing process. Mortgagors will be suffering deficit financing. Mortgagees will find they own a lot of houses which they will wish to dispose of in a declining market [which is now underway in New Zealand - the decline has been about 10% so far]. There will be a rebalancing of financial rewards and desirability of financial instruments. 5% bonds will not be desirable as new borrowings are made at higher and higher interest rates. Bad luck for those who made loans at low interest rates. As you say, higher interest rates will put downward pressure on share prices as Dow revenues and profits decline. But, going against that effect, what about the seemingly endless Chinese and Indian maths involving supply of goods and services at low and lower prices and the resultant burgeoning demand? Despite higher interest rates, profits in the Dow will boom. My guess is that even as the financial measuring stick is shrunk by Uncle Al KBE by annual decimation by dilution, inflation won't get a look in because of the Chinese/Indian supply increase and the world's burgeoning economy will carry on burgeoning. Uncle Al will be able to pixelate in a way never before seen in human history [without causing an enormous inflationary implosion with wheelbarrows of pixels being needed to buy a bar of soap]. Other countries won't stand idly by. They too will be pixelating in earnest, currency grinding against currency, the whole process being largely concealed by the deflationary Chinese/Indian maths. People won't take great fright despite enormous pixelation because they won't see much inflation. Therefore, interest rates won't have to rise as much as one would think. So, here's the plan: Uncle Al keeps clicking copy/paste in the money printing mill. So does everyone else. He increases interest rates and so does everyone else. Demand for US$ increases as Earth's GDP continues to boom. House prices sag. SUV sales shrink. Oil demand stabilizes. Oil prices fall. Oil's market share falls. CDMA sales for 3G services boom. Sales of Chinese/India products and services continue to boom. Dow 'profits' increase, Dow share prices increase. Dow components here: money.cnn.com They don't look too much like dogs to me. By 2010, the Dow will be 20,000. Inflation will be still low. Interest rates will be around 8%. Earth's GDP will be booming. QUALCOMM will be the world's first $1 trillion market capitalisation company. You will have bought several devices with QUALCOMM technology on board. Ai Li will enjoy hers. She'll be adept at using them. Mqurice