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

To: Tommaso who wrote (98799)	1/2/2008 9:14:56 PM
From: GST	Read Replies (1) \| Respond to of 306849

<Economics 101> <<in·fla·tion /?n'fle???n/ Pronunciation Key - Show Spelled Pronunciation[in-fley-shuhn] Pronunciation Key - Show IPA Pronunciation –noun 1. Economics. a persistent, substantial rise in the general level of prices related to an increase in the volume of money and resulting in the loss of value of currency (opposed to deflation).>> Turns out that some people lost their dictionaries. I hear chatter about the dollar rising in coming months -- has a very hollow ring to it. I think the pattern is set -- slowing economy, falling dollar, rising prices. In the short term it seems that the central banks have managed to persuade people not to panic -- a remarkable achievement under the circumstances. And in the short term interest rates have been eased. The downward pressure on the dollar seems likely to increase as the lipstick starts to wash off the pig. If long rates rise on inflation expectations then the economy will slow even more than it has -- and that will put additional pressure on a very fragile dollar. I don't think the Fed fears a recession -- I think they fear the potential for a dollar collapse in a recession. They are willing to add to an existing inflation threat to keep the economy from stalling out and sending inflation through the roof. Recession and inflation are joined at the hip -- understanding that will be the key to surviving the next down leg of the dollar. Lower rates will seem like an increasingly desperate attempt to goose an economy even as inflation soars.