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I am beginning to feel a bit out of my depth in this discussion, but
I'll try to keep a hand in.
Both Bruce and Stuart have (IMO) done a great job of describing where we
are, ie, why the wheelbarrows full of money coming out of the Fed have
not led (yet) to a deterioration of the US$ -- the $ has become a store
of wealth in country after country experiencing a 'flight to quality' of
huge proportions.
Looking ahead, however, raises the issue of how (and when) does this
unusual situation revert to normal. I am made nervous by the experience
of history -- the events of 1929 were started by a fall in commodity
prices rocking the economies of producers like Australia, S. American
countries, etc. It was followed on by more developed countries (Germany)
mismanaging their finances.
Today the commodity is oil, and the economy is Japan (or Russia or
Brazil or ...) And I remain unconvinced that pumping US$s into the
global economy is anything more than triage. And worried that the
patient cannot, in the long run (yes, I know, in the long run we are all
dead, but economies linger on) be saved.
JMHO
Dan Goncharoff
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