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 : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: bond_bubble who wrote (48232)	12/27/2005 3:58:45 PM
From: mishedlo	Read Replies (2) \| Respond to of 110194

I agree with you on the quality of official opinions emanating from the Fed/White house/treasury etc. They say that they want China to reevaluate Yuan. But I'm assuming, internally, the US govt officials are begging China not to revalue until Bush leaves office. The officials probably understand that yuan revaluation will cause CPI to go up - and hence interest rate to go up and cause recession very soon. In other words, the CPI is becoming complex because it also depends on what China does (besides what the Fed does)!! But I think, China has become a factor only because China has sucked US into the financial vortex by accumulating USTreasuries and now it has become a substitute/partner of US Fed. If you sum-up the activity of USFed/Asian Central bank - then the CPI should obey the old law. The rate at which fed release USD and the rate at which Asia appreciates/depreciates their currency, CPI in US will show up... I think you are making way too much of all of this. It is the politician in Congress screaming for that Repeg. Snow and the administration are trying to appease politicians. If no one was screaming Snow would not be yapping. I am not so sure the idiots have any idea what would happen. I think Greenspan does and that is why he argued against tariffs etc from Congress as a way to force the issue. If there is not a dramatic revaluation of the RMB (and I still maintain that if China floated the RMB it would crash not rise), I see no reason for a huge rise in the CPI. In fact I think it will fall. I expect consumer spending to fall, housing to drop off a cliff and that will more than make up for any inflation issues IF the dollar falls. I do not think the latter is a given although it is likely. The entire system is F*d to the core and it certainly is not just the US$ that is suspect. As far as US$ assets go, I expect treasuries will do very well. Mish