Friday, November 7, 2008

The Coming Progression

Now: deflation.
Later: inflation.

First: falling asset prices.
Next: falling consumer prices.
Next: "money from helicopters."
Next: rising prices.
Next: the end of the US dollar-based monetary system?

Keep watch for the inflationary recession to begin.

What about the US dollar? The problem with being the world's reserve currency is that more money is created than is necessary for the domestic economy's needs. For decades, the United States has created far more dollars than it needs, but it "didn't matter" so long as other countries were prepared to buy and hold those dollars. But those dollars still exist. As other countries lose confidence and diversify, those dollars eventually come back. A flood of US dollars means inflation.

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