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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: gregor_us who wrote (80115)	6/26/2007 12:55:40 AM
From: zebra4o1	Respond to of 306849

Market Insight: Carry trade threatens a deflationary global collapse Ultimately there must be a sharp convergence of exchange rates with fair values, inflicting heavy losses on carry trades. The size of the global carry trade is at least $1,500bn and losses from a convergence of currencies with fair values could total about $550bn with most of these losses accruing to leveraged speculators. ft.com

To: gregor_us who wrote (80115)	6/26/2007 9:18:53 AM
From: Wyätt Gwyön	Read Replies (1) \| Respond to of 306849

Gregor, with all due respect, i think you're cherrypicking to value the USD purchasing power against commodities in 2000. commodities had been in a massive bear market from 1980. the CRB (commodity) index in 2000 was lower than it was in 1973. if one used the CRB as the yardstick over that time frame, it would imply the USD had actually seen an increase in purchasing power over a 27-year period containing the two most inflationary decades of the 20th century. one could similarly cherrypick 1980, when the CRB spiked to around 350. using that as a reference, the USD has barely lost any nominal purchasing power even today, despite massive apparent inflation, massive increases in nominal income and GDP, and massive increases in asset prices including an order-of-magnitude rise in the DXY. my point is, i don't think changes in commodity prices are necessarily the best reference point for determining overall purchasing power. they understated the loss in overall purchasing power from the 1970s to 2000, and have overstated the loss in overall purchasing power since then. it seems to me that commodities have their own long-term pricing cycles, which are only loosely correlated to changes in overall purchasing power. (i say that as a commodity bull.)