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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 (62246)	5/30/2006 5:56:33 PM
From: Mike Johnston	Read Replies (4) \| Respond to of 110194

I could be wrong betting on the decline in the dollar, but i think it would take a drastic policy change in Washington to change its direction, a policy change that most likely is no longer a viable option if the country is to avoid 20% unemployment and 50-70% decline in house values. The government can always engineer a lower dollar by printing more of them, but it takes solid economic fundamentals for any currency to get stronger. IMO the economic fundamentals are so horrific, that there is no other option but to let the dollar go, in order to ease the debt burden. Even if they attempted to save the dollar i am not even sure they would be successful. It would certainly take rates north of 10% and cause the housing market to experience pain of epic proportions ( read 70% or more nominal declines). Also it would require government budget cuts of at least $500 billion. Who knows, maybe it is a choice between the economy losing 30 million jobs in deflation or 15 million in hyperinflation (at least initially)