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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 (62362)	5/31/2006 4:23:04 PM
From: GST	Read Replies (1) \| Respond to of 110194

My assumption is simply this: No country running a current account deficit at a rate of 7% of GDP and has already racked up many many trillions in foriegn debt while running a negative savings rate and that adds nearly a trillion per year to that deficit can get away with it -- period. That is the problem with the dollar in a nushell and there is no way around it. There is only one outcome that is strongly indicated -- a far lower dollar and persistent inflation. This is not a poorly founded assumption dealing with relatively minor swings in the business cycle or with a single asset class like housing. I assume the dollar will fall because it cannot do otherwise. Indeed, it has already fallen substantially and looks set to get much, much, much, much worse as the economy slows. That is less an assumption than it is a well established and well founded trend.

To: mishedlo who wrote (62362)	5/31/2006 7:45:15 PM
From: Ice Cube	Read Replies (1) \| Respond to of 110194

the only problem with all this is that the rest of the world is a mess. I spend most of my time in Asia on business and I can tell you the economic dislocations are too great in Asia for there to be a replacement of the dollar as a reserve currency. Govt. and corporate corruption, rule of law, property rights etc just won't allow these economies to overtake the U.S. in any meaningfull way.... Europe is a mess also..... As I like to say, "if the dollar falls, another currency has to rise"... so which one? ...... The Yen? Japan is a mess in terms of demographics and their currency has always been used behind the $..... Sure the Euro has gained some ground, but everyone knows that the failed policies of most of Europe make it impossible for the continent to overtake the U.S. as a world power (economic) I think a problem most people havce is that they never travel for any extended period of time or do business in other countries, so when people take a stat and try to make sense of it, there is no basis in the real world as to the truth. Sure there are booming areas of the world, but as sure as I am writing this, the govt and powers that bein those countries will blow up a good thing.