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: mishedlo who wrote (17700)	12/5/2004 5:48:36 PM
From: gregor_us	Read Replies (2) \| Respond to of 116555

Mish--In the Deflationary Scenario You Describe which I agree with and which I see coming also (what deflationary scenarios have I not agreed with -ggg) --would you not agree that the USD will be tanking? And hard? It seems a certainty that the USD will tank as the verification of a collapsing deflationary spiral sets in on the US economy. But what has changed in my viewpoint is that I now believe Treasury Bond Yields will rise in this environment. Yes, they will rise in a deflationary environment because we are not in control of our bond market. The world is. It is a sickening thought but I no longer see the internal deflationary effects of a debt-ridden US economy (which will be finally getting "called" over the cliff) as having a bullish effect on US Treasury Bonds. The reason is the dollar will be tanking, and foreigners will simply go elsewhere. If we want them back at THAT point, we will have to pay them much, much higher rates of interest. In other words, any domestic inclination to hide in Treasury Bonds will be swamped by the effects of a crashing dollar. At best, people may "run" to one and two year bonds. But everything out the curve after that will be toast. US Treasury Bonds will be be just as toxic as the dollar. Higher interest rates, higher oil prices, the dry-up of stimulus, and now a falling dollar which is indeed pushing up interest rates, have finally pulled back the curtain on the terrible Deflation Monster. Growl and Grrr! The Monster has been activated by this woosh of short-term inflationary pressure. Now comes everything you and I and everybody else had always described on this board. Sadly, it will all be made more horrible by falling Treasury Bond prices. Regards, LP

To: mishedlo who wrote (17700)	12/5/2004 8:09:43 PM
From: tony	Read Replies (1) \| Respond to of 116555

Mish, Our economy runs on oil. We know Oil will keep going up as Dollar keeps devaluing. It has at least 50% more to go. When we have gas $5 per gallon everything will get expensive forget about Widgets made in China. We cannot compete with china. We can assemble here, no real manufacturing. How can that be deflationary? I have NEVER seen produce so expensive in Grocery Stores. I think housing will NOT appreciate but housing gets cheaper every day in terms of Euro. Currency devaluation is inflation period. It does not matter how many jobs we outsource to India. Also, we cannot compare with Japan, they are savers, and we live on debt.