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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 (36717)	7/22/2005 6:53:42 PM
From: GST	Read Replies (1) \| Respond to of 110194

Ask yourself two questions: 1) Is there a housing bubble? You say yes and I think it is generally agreed at least among those here, 2) Is there a dollar bubble? That seems clear to many, but I am not sure you agree. If there is a dollar bubble and it bursts, the dollar bubble is likely to be larger than, and have more impact than, the housing bubble. The bursting of the dollar bubble is inflationary while the bursting of the housing bubble is deflationary. And therein lies the debate -- do we have two bubbles? When will they break? What will be their impact? I see the bubbles as twins, destined to go over the falls in the same barrel. But the dollar is the bigger of the two IMO -- far bigger. So I see inflation as a great concern.

To: mishedlo who wrote (36717)	7/22/2005 7:00:35 PM
From: futures speculator	Respond to of 110194

If someone can offer a scenario other than "the FED will print its way out of it, destroying themselves in the process" Mish, why do you dismiss the money-printing scenario? There is an old motto that "democracies inflate or die". Even countries where most of their (foreign-held) debt was denominated in foreign "hard" currency, chose to print money and debase the currency. Whereas US's debt is denominated in its own currency, to do with it as it pleases. Household debt in USA has increased by 55% since 2000 to over $10 Trillion. As you correctly pointed out in some article in your blog, wages aren't rising, among others due to wage arbitrage with Asian labor. How are the US households going to service this debt with stagnant income and rising rates? Same with Federal debt, SS liabilities etc. My theory is that US will pull the same trick it pulled in mid-1980s (i've posted it in previous post here) and pay a lot of those debts with sharply depreciated $USD. The confidence dollar didn't get destroyed back then and it won't be detroyed this time, as long as no "credible alternative" presents itself. And even in that case, the US-controlled world media of mass deception could spread enough FUD to ensure that most sheeple stay with the dollar. My 2c