Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: ggersh who wrote (15954)	1/2/2009 8:34:55 AM
From: RockyBalboa	1 Recommendation Read Replies (1) \| Respond to of 71403

On this thread you read it. Deflation means credit contraction means less dollars means printing dollars is easy to retire all treasury debt means the value of the dollars go up or so, right? (See: siliconinvestor.com And yes I sign a petition to repeal the Rule of Gravity too! -g-

To: ggersh who wrote (15954)	1/2/2009 9:28:22 AM
From: Elroy Jetson	Read Replies (2) \| Respond to of 71403

Deflation is very bullish for all currencies, and very bad for the price of all assets, but this is undercut to the extent of the "success" of any reflation policies. You may have read deflation is Dollar bullish at this link or many others with similar ideas. . marketoracle.co.uk . Oh, where did I read that deflation is Dollar bullish??? Those who point out the significant difference between the U.S. and Wiemar Germany, merely point out the obvious. U.S. debt is denominated in U.S. Dollars. In this regard, exchanging U.S. debt in return for newly created U.S. Dollars should be expected to be essentially a wash, with little effect on the value of the currency depending on how much demand is created by the new currency when it is created. In a deflationary environment, the currency returns with little multiplier effect - but any callable debt was costing little anyway. An expectation of paying off debt with new currency causing a rise in the value of that currency is as remote as expecting this action to result in a decline in that currency value. In an economy reaching full capacity, to prevent inflation, the extra currency must be removed by exchanging it with debt - or the currency will find it's way into rising asset prices and or cost of consumables. This is both reasonable and interchangeable as it equilibrates the difference between the initially high return on assets and the low return of interest rates. .