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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: ballsschweaty who wrote (67788)	8/19/2007 12:53:34 PM
From: daveinmarinca	Read Replies (1) \| Respond to of 116555

"If money/credit growth slows or contracts, I expect the opposite effects as we've seen over the past 4 years. ".....wouldn't the Fed continue to/accelerate the printing to liquify their way out of this situation, deflation being the big concern? With the destruction of credit, M3 growth has been flat for the last 3/4+months. I would think the fed, in order to keep the system operating, would/will open up the "flood gates", maybe gradually but follow the Greenspan put. Is your thought that Ben can't "print" fast enough?

To: ballsschweaty who wrote (67788)	8/19/2007 6:45:04 PM
From: NOW	Respond to of 116555

strong dollar does not equate with weaker gold

To: ballsschweaty who wrote (67788)	8/20/2007 6:28:31 AM
From: Real Man	Read Replies (1) \| Respond to of 116555

It's the basic carry trade principle which rules forex. Lower interest rates in the US vs the World will result in a fall of the dollar.

To: ballsschweaty who wrote (67788)	8/20/2007 1:53:54 PM
From: benwood	Respond to of 116555

Credit defaults change the equation, and wide scale defaults change the equation dramatically. And in the face of widespread and earnest efforts by foreign CBs to get out of dollars, they'd do this: 1. Sell treasuries (creates demand for somebody to give them the US dollars, so dollar buying pressure) 2. Take those dollars and exchange for Euros or gold or something else (pressure to sell the same dollars, which will now recycle around in a circle as they sell more T-bills and buy more Euros etc.) I can't think of a scenario where THAT particular debt being repudiated would cause the US dollar to rise, for the simple reason that anybody ditching interest-bearing T-bills will not settle on simply putting US dollars in their vault. I think it's more likely that dollars would be created by the printing presses to meet demand for the returning treasuries and confidence would be lost in the dollar thus encouraging other exchanges out of dollars. So the big question I think rests on the solvency of big borrowers located in the US mainly. If there are significant busts, then significant dollars will simply vanish. That that also leads to lower confidence in the dollar, unless conditions are actually much worse on the whole elsewhere, and thus greater redemptions from elsewhere.