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

To: GST who wrote (20015)	4/25/2009 9:56:21 PM
From: axial	Read Replies (4) \| Respond to of 71455

"It is easy to confuse conditions of slow or negative real growth with deflation." For those who don't know the difference, true. "The most likely future is stagflation" That's a very popular view. Not sure if you're advancing it for discussion, as an indisputable fact, or as an opinion. Jim

To: GST who wrote (20015)	4/26/2009 6:10:56 PM
From: axial	Read Replies (1) \| Respond to of 71455

Understand your POV on stagflation. The question (to me anyway) is "When?". "Stagflation" is simply a different form of inflation. So is "hyperinflation". Without significant interim adaptation by the US economy other economies will take the lead. US markets will underperform. Simply put, the US economy is overvalued. To regain market share, the US must make huge changes, deflationary, innovative and structural. They're equivalent to a lower standard of living. If they're not made, stagflation will appear even sooner as inflows decrease and interest rates rise. When (and IF) rationalization of the US economy completes agreed that stagflation will come - aided by high interest rates and restrictive monetary policy. But not until the deflationary trend is exhausted: then, it will begin to morph. Other things being equal, the subtext here is that greater US deflation = a more competitive US economy. Barring surprise developments that's my operating assumption, affecting inflationary hedges such as gold and commodities - but not gold and commodities as "flight to safety". Jim