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

To: SG who wrote (13675)	10/28/2008 8:37:24 PM
From: Real Man	2 Recommendations Respond to of 71456

In a currency crisis you get a spike in price of imported goods including commodities and gold, while all assets and government bonds drop dramatically. Inflation gets much higher. Eventually, the country that produced nothing and relied on foreign manufacturing is forced to rely on domestic production only, so there will be manufacturing boom after the crisis, UNLESS a zillion in new currency is issued. In that case manufacturing dies due to collapse of the currency and the country falls into the hyperinflationary spiral. That said, things are a mess, and the crises develop individually, since in a fiat currency world the result depends on policies implemented. You can't bet on a repeat of something that happened in another country. In Russia, for example, prices for apartments dropped 40% in dollars, but increased 3-fold in roubles, when the rouble fell 80% in 1998. In Zimbabwe the economy and the currency totally collapsed, but prices for stocks in local currency skied (hyperinflation). Technically, a government CAN make stocks and housing go up by printing Zillions, but that would be pretty bad for the dollar. What inevitably goes down regardless of the policies is the purchasing power of the stock index or one unit of housing. Note that the purchasing power of the DOW has been going down since the internet bubble burst in 2000.

To: SG who wrote (13675)	10/28/2008 8:57:00 PM
From: Real Man	Read Replies (1) \| Respond to of 71456

Note that the exporter countries will experience deflation.