Replies

And that makes sense...and hence the reason that I am beginning to think that all this "crash" talk...at least in regards to it happening immediately or in the next couple of years...are a little overblown.

If Europe is fleeing to treasuries...and if China really can't dump the US without crashing their OWN economy...then I don't see how we get this hyper-style inflation so many FReepers keep touting....at least not in the time frame they are saying.

Lance Roberts on KSEV in Houston said on Friday evening that this was not going to cause bonds to rise like some were saying. He has been right about pretty much everything so far. Think I will start listening to him.

... I am beginning to think that all this "crash" talk...at least in regards to it happening immediately or in the next couple of years...are a little overblown.

It depends on which type of crash you are talking about. A deflationary collapse, triggered primarily by European collapse, is very much still in the cards. This will, as you point out, make our debt more attractive, at least over the short term. There is no way on God's green earth that Germany will actually bail out Europe. To do so, would mean that their debt would instantly become worthless. Politically, however, they are playing along, just so that they don't appear to be the villain.

A hyperinflation situation is possible, but only after a violent, forced de-leveraging occurs globally. And it will, since an ordered, voluntary de-leveraging is simply not going to happen.

By the way, with all the focus on the DOW, is anyone seeing what is happening in the European markets over the last few hours? Some pretty serious carnage.

Bonds won’t rise unless the printing presses at the Federal Reserve start working double overtime shifts. Then you’ll have that hyperinflation. QE3? TARP2? If that happens look out! The dollar will be in free-fall. Every country that has gotten itself into a bind with creditors has tried inflating their way out of the mess. That’s what happened in Weimar Republic Germany just before Hitler seized power. He wasn’t going to let a good crisis go to waste...........................