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| User Info | Deflation or Inflation? Slumpflation or slump-parity?; entered at 2007-12-02 04:39:22 | |||
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Sackerson Posts: 10 Registered: 2007-12-01 
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(Sorry all, I originally out this in the "Rumours" section by mistake. Here goes again:) I'd like to ask your expert opinion, since you traders back your judgments with much precious money. Karl has explained how the revaluation of property portfolios would reveal a number of lenders to be heavily insolvent, and that the resulting destruction of money is deflationary. He has also indicated that faltering domestic consumer demand is slowing the velocity of money, also deflationary. But set against that is the dollar's threatened status as the world's reserve currency; should it be replaced, tides of dollars may come home. And there is the Federal Reserve's clear commitment to continue reflation in order to avoid a Thirties-style slump. So to what extent will these trends work against each other? Could we, for example, see a dollar pretty much holding its foreign exchange value because of the conflicting inflation/deflation factors, but accompanied by an economic slump nonetheless? Will America's enormous debts ultimately be paid off, not through inflationary theft, but through the sale of assets, e.g. to sovereign wealth funds? | |||