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

To: Cogito Ergo Sum who wrote (22695)	9/10/2009 10:13:11 PM
From: ayn rand	4 Recommendations Respond to of 71454

As Nobel economist Joseph Stiglitz recently noted, the bureaucrats that designed this bailout are “either in the pocket of the banks or they're incompetent. It's a real redistribution and a tax on all American savers. This is a strategy trying to recreate the bubble. That's not likely to provide a long-run solution. It's a solution that says let's kick the can down the road a little bit. They haven't thought enough about the determinants of the flow of credit and lending.” The bottom line is that the attempt to save bank bondholders from losses – to provide monetary compensation without economic production – is not sound economic policy but is instead a grand monetary experiment that has never been tried in the developed world except in Germany circa 1921. This policy can only have one of two effects: either it will crowd out over $1 trillion of gross domestic investment that would otherwise have occurred if the appropriate losses had been wiped off the ledger (instead of making bank bondholders whole), or it will result in a stunning and durable increase in the quantity of base money, which will ultimately be accompanied not by a year or two of 5-6% inflation, but most probably by a near-doubling of the U.S. price level over the next decade. As I've noted previously, the growth rate of government spending is better correlated with subsequent inflation than even growth in money supply itself, particularly at 4-year intervals. Regardless of near-term deflation pressures from a continued mortgage crisis, our present course is consistent with double digit inflation once any incipient recovery emerges. May 2009 The Destructive Implications of the Bailout - Understanding Equilibrium John P. Hussman, Ph.D.

To: Cogito Ergo Sum who wrote (22695)	9/11/2009 5:21:07 AM
From: axial	Read Replies (1) \| Respond to of 71454

It's no fun at all trying to get a fix on what will happen. How will Canada progress if the US economy fizzles? We're getting lots of inflows because of our relatively "healthy" economy and banking system - but how healthy are we? Mark Carney says he'll use QE if CAD increases too much, relative to USD. OK, USD is declining: so when do we stop following it? "So while China and others complain the US Fed is monetizing the bad debts, if not for that the entire world financial system would have collapsed on two occasions. Remember the near bank runs in the UK and the US in latter 07 and 08 especially? But the USD won't go down quietly either because someone like China will force the Fed to stop the bailouts, or else trying to wean the world off the troubled USD will prove so painful that the world will scream when it happens. Not only would there be tremendous economic damage and contraction if the USD were to crash, but also there will be a wave of currency crises as the world tries to readjust all the major currencies to that event. It's not an easy situation for anyone. The demise of the USD will have vast unpredictable results. And in our present fragile financial world, unpredictable is bad. Nevertheless, the USD must revalue down. But how is this to be done?" USD Clamor; The USD won't go quietly ibtimes.com --- You're back from your vacation; here's a question for you: in your travels, where in Canada did you see clear evidence of a recession? In trips from Newfoundland to Vancouver Island and in-between, I saw pockets of recession --- but overall, you couldn't tell there was a problem. Real estate is spiking, home sales are up in St. John's, Vancouver and Toronto. Calgary's cookin'. Not like the 80's recession at all, and this is supposed to be far worse! Reminds me of stories about the Phony War in England - before Dunkirk, and before Germany started bombing. Lovely weather, everybody still travelling and taking trans-Atlantic trips, life was almost normal. The war was "over there", and life was fun. Present circumstances have the same surreal quality: phony. Main Street looks fine, but deficits are in and unemployment is up... hard to deny the statistics. Preservation of capital seems to be the only sensible course. What's going to happen to the US, Canada, or anywhere else? Is this just a bear-market rally before the hammer comes down? Dunno. Strange times! Jim