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Strategies & Market Trends : The coming US dollar crisis -- Ignore unavailable to you. Want to Upgrade?

To: Larry S. who wrote (6618)	4/27/2008 3:33:47 AM
From: Real Man	Respond to of 71456

"Who is going to keep pushing commodity prices into the stratosphere?" Central banks, as they try to keep asset bubbles levitating and defying gravity. They have 2 tools at their disposal: 1) interest rates 2) the printing press We are in a cycle when real assets outperform paper assets. Central banks can't stop that process, but they can fight the deflation of paper assets by devaluing the unit they are priced in, thereby inflating the real assets. The degree of commodity price inflation depends on how much they print. If they don't print at all, then deflation happens, and the DOW tumbles to 1000, while oil goes back to 30. Nevertheless, oil keeps increasing relative to DOW, because both are priced in the same units.

To: Larry S. who wrote (6618)	4/27/2008 3:55:17 AM
From: Real Man	Respond to of 71456

In other words, nothing CBs do can change this cycle picture (commodities and papar assets are priced in the same unit of currency), which is why commodities will likely keep soaring longer term. They may have a correction if we have a global recession in which stock prices drop significantly. A long race to the bottom, I'd say.