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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 (49404)	1/11/2006 1:20:49 AM
From: UncleBigs	Read Replies (3) \| Respond to of 110194

That's what I tend to think also Mish. However, I do listen closely to the dollar bears and contemplate what that means. It's possible that the dollar craters, import price inflation takes off and interest rates move substantially higher. If that happened, our economy would completely seize up and we would have a debt collapse. It's hard to completely think through a scenario where we get high unemployment, deflating asset prices, high interest rates (caused by low dollar), inflating commodities (and import price inflation) and debt liquidation (credit contraction). I suppose all of that together is possible to some degree but something about that logic doesn't feel right to me. There are competing forces at work and it's difficult to figure out which will win out. For example, given the above, worldwide construction activity would come to a halt so it is hard to fathom lumber, copper, zinc, etc skyrocketing in price as demand plunges. It seems like supply/demand fundamentals would overtake a dollar exchange rate devaluation in this case. Mish, have you previously integrated your deflation thesis with a collapsing dollar vs. euro/yen/yuan?