Faces of Death: The U.S. Dollar in Crisis

Seeking Alpha ^ | 10/09/09 | Ron Hera

[TigerLikesRooster]

Faces of Death: The U.S. Dollar in Crisis

by: Ron Hera October 09, 2009

/snip

Following two sequential economic bubbles, the dot-com bubble and the real estate bubble, no one has yet correctly called either the bottom for the US economy or the start of a US economic recovery. Nonetheless, each day, news reports, articles and statements by officials and commentators reveal new economic data and offer new analysis. Unfortunately, both the economic data and the interpretations offered by officials and commentators are contradictory.

It appears that both inflation and deflation are occurring at the same time; that the US gross domestic product and consumer spending are declining while stock prices are rising; that government spending is rising while tax revenues are falling; that consumers are deleveraging and that the flow of credit has slowed while the total of debts and liabilities in the US economy continues to rise; that the US dollar is falling while price inflation remains nominal; that interest rates are near zero for banks but rising for consumers. The seemingly contradictory facts indicate economic distortions and therefore developing systemic instabilities.

/snip

The apparent choice between inflation and deflation may itself be illusory because both assume the US dollar can survive the developing systemic instabilities in the US economy and growing pressure on the dollar. Since monetary inflation is tied in lock-step to debt levels, an inflationary policy response might produce only unsustainable economic distortions. It is too late to put the inflation genie back in the bottle, thus there is no fundamental way to stop the slide of the US dollar in the long run.

[TigerLikesRooster]

Ping!

[BGHater]

Interest rates will remain low. More dollars being printed. :(

[mojito]

The US can not support both massive government spending and low interest rates. Unless you want a banana republic economy, which we’re heading towards every day.

[GOPJ]

It appears that both inflation and deflation are occurring at the same time; that the US gross domestic product and consumer spending are declining while stock prices are rising; that government spending is rising while tax revenues are falling; that consumers are deleveraging and that the flow of credit has slowed while the total of debts and liabilities in the US economy continues to rise; that the US dollar is falling while price inflation remains nominal; that interest rates are near zero for banks but rising for consumers. The seemingly contradictory facts indicate economic distortions and therefore developing systemic instabilities.

Ping

[bruinbirdman]

Not looking for a W in the market. After the second drop the market should stay flat for a few years. That will be the time to appreciate dividends.

yitbos