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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 (36545)	7/21/2005 10:52:43 PM
From: GST	Read Replies (2) \| Respond to of 110194

Thank you for your post. I continue to hold the opinion that you have not factored the current account deficit and the implications for the US dollar into your analysis. If the US economy slows, the value of the dollar is likely to be unsustainable -- all the more so if the Fed prints money, but even if it maintains a "tight" policy, I do not see anywhere for the dollar to go but down. Look at the spectacle of the US demanding that the Chinese must raise their prices accross the board -- and they obliged! Congratulations -- what a victory for America. Now we can pay the Chinese more than we did yesterday for the same goods. The direction to which this points is not deflation, but inflation in import prices, as we are already seeing for oil. The end of cheap credit, cheap oil and cheap labor is at hand. The result will be a decline in American living standards as our purchasing power declines along with our relative importance in the global economy. It is possible for our economy to stagnate while our currency tanks and import prices spike. I would call that stagflation.