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

To: ild who wrote (53921)	2/15/2006 3:25:40 PM
From: mishedlo	Respond to of 110194

IMO the effects will reduce the consumers' buying power which in turn will prevent big price increases in consumables. He does not believe that is possible. In his world prices have to go up if the US$ drops. An interesting point of view given that when the US$ was rising for as long as it did, prices were going up. Hmmm prices go up on rising US$ prices go up on falling US$ Obviously the conundrum is easily solved because money supply/credit was rocketing the whole time. A theory that he will not admit and thus he has no logical explanation for via his dollar centric inflation=prices view. Mish

To: ild who wrote (53921)	2/15/2006 3:40:40 PM
From: GST	Read Replies (1) \| Respond to of 110194

There is no way of knowing where US asset prices will go -- it seems reasonable to conclude, as most here already have, that we are nearing some sort of peak stupidity in asset pricing. But this is still far from certain. As for this thread -- the bond bubble is a single dimension of a larger bubble -- the dollar bubble -- and when the dollar bubble bursts it will have enormous consequences for assets, consumables and bond yields. A bursting of the dollar bubble will send bond yields soaring. Consumables are increasingly imported -- that means that the value of the dollar is a key factor in setting prices in the US. If the US economy stalls, the dollar is almost certainly going to fall, and that will tend to drive prices higher. As far as demand for commodities themselves, as I have said in other posts you cannot fully grasp the source of global demand for commodities until you have witnessed the rise of Chinese cities and consumerism -- it is truly breath-taking and shows no signs fo abating. More high rise space was completed in Shanghai last year alone that there is high rise office space in all of Manhattan -- and Shanghai is the tip of the iceberg. China is building cities at a rate of roughly 30 million people per year. Easily ten times the rate at which we are growing our cities.