cdcaddy

The Coming Dollar Deflation

shortage??? Actually just hoarded dollars... everyone wants them thinking that the buck is better to hold - but sooner than later this bubble will burst or deflate quickly... Why? Because the US cannot borrow it's way out of debt nor print [$$$] it's way into prosperity... and certainly with deflation taking a toll on the economy... Ben and the boys in DC will run the dollar aground - thinking that they can control inflation better than they can deal with the problems of deflation... let's all hold our breath and hope they can reign in the economy before it implodes.



On Dec 02 10:33 AM SWRichmond wrote:

> Patience, grasshopper.
>
> www.cnbc.com/id/280145...
>
> "Cost of Insuring Sovereign Debt Jumps to Record High"
>
> Referenced article points out the high, and growing risk of default
> in sovereign bonds, due essentially to the high demand for funds
> that governments are experiencing to fund various bailouts and stimulus
> packages. THESE PROGRAMS HAVE ONLY JUST BEGUN, and in many cases
> have not yet even begun to be funded.
>
> Hide in Treasuries if you choose. The "stock market is a generational
> buy" paradigm took more than a year to break, so too it will be with
> the "Treasuries as safe haven" paradigm. The herd is monumentally
> wrong.

The Fed Money Machine Gears Up to Print Trillions

The process by which the economy is going thru now [last few months] has me dazed and confused... hopefully someone will lead me in the right direction... the TARP program is meant to buy bad assets - so the $250B isn't really flooding the market - plus it's been infused into banks by buying shares...and the dollar has moved up because the de-leveraging of various financial positions along with fund re-demptions requires dollar denominations - so everyone needs the $$ - yet to conquer part of this - the Fed has to continue to sell more Treasuries [future tax income/earnings] to prop all this up...at some time don't we reach a point of diminishing returns... when so much money is out there...thru real dollars and sold debt that the value of the $$ starts a true decline...and how much of our future tax income can the govt sell before they realize the black hole they have created. With incomes falling plus an erosion in the tax base coupled with a growing senior populace that will require more govt $$$ to support - aren't we at a saturation point that spells trouble??? what gets us out of this mess - you can't fund debt with more debt... do we have one of those moments like in Animal House where after they wreck Flounder's car we tell the world - "hey you screwed up - you trusted us"???

This Recession Will Be Anything but Deep

I totally agree with the inflationary period ahead of us...however I keep wondering when that cycle is going to start since the dollar seems to be holding. Certainly it's up due to the fact that it's the "best looking" ugly currency in the basket - but with the US printing presses winding up and a rising tide of dollars being pushed into the economy...I'm expecting an inflationary process to begin almost any day...