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

To: mishedlo who wrote (21247)	1/13/2005 11:11:52 AM
From: russwinter	Read Replies (1) \| Respond to of 116555

Mish, you could be seeing no inflation in the UK because there is still good demand for their currency. As long the the authorities protect the Pound, then it will work to protect that nation from a huge round of inflation as opposed to what big money printers like the US (and I think Japan and China)is experiencing. It's a totally different animal, so I don't think you can use the nations who work to maintain currency values as the model for inflation. The US debases it's currency therefore demand for it falls faster than economic activity falls (when that finally happens, which I believe is forthcoming), and that's an important distinction you should understand. It's not an economic decline=deflation dynamic, it's rapidly weakening demand for a given currency= inflation. The only way I can see the US avoiding a spiraling inflation at this point is to lay off the printing presses and heroin (and thus restore confidence in the USD) for the next year, in the manner they have the last five weeks (an experiment?). If the Wizards react to the emerging weak economy by debasing with heroin, you will see inflation accelerate, not decelerate, as demand for the USD will fall faster than the fall in economic demand (the Argentina model).