Is the Era of Hype and Happy Talk over...?
Will the US economy be forced to act just like every other economy in the world...?
COULD THE LAWS OF MACROECONOMICS BE MAKING A COMEBACK...?
That seems to be the dilemma that the FED will be facing in 2007... The Massive debt and deficits that have been financing the US "economic miracle" since the Greenspan Bubble Daze could be ending...
THE CHINESE ARE STARTING TO TAKE AN INTEREST IN THE NATION WHOSE BONDS THEY ARE BUYING IN SUCH PROFUSION...
And our unpopular President with his unwinnable wars is not helping the myth of "American Exceptionalism" upon which the global economy has been based for the last 50 years.
COULD IT ALL BE ENDING...
OR IS THIS JUST ANOTHER IN A LONG SERIES OF HEAD FAKE DECLINES...?
Well, consider:
If the Dollar and the Bond are involved...this could be serious...
If it's just a matter of re-pricing the Moonshot Dow to more reasonable levels this could all be a false alarm...
Clearly, the central bank gnomes are actively bashing gold like there is no tomorrow...all in an effort to "defend" the dollar by attacking it's only known theoretical alternative...namely, the precious metals.
SO WATCH GOLD...THE BOND MARKET AND THE DOLLAR FOR SIGNS OF WHAT'S REALLY HAPPENING... THE MOVEMENT OF THE MARKET AVERAGES IS REALLY A SIDESHOW NOW...
IF THE DOLLAR MOVES TO 140 ON THE EURO...VERY LIKELY THE ECONOMIC WORLD AS WE HAVE KNOWN IT WILL CHANGE DRASTICALLY...
(JUST LOOK AT HOW PEPPY OIL CAN BE WHEN NO ONE IS LOOKING...!)
THE DOLLAR IS THE KEY...THESE CONSTANT DECLINES IN THE DOLLAR COULD FORCE THE FED TO RAISE RATES....EVEN IF WALL STREET PROTESTS AND SELLS OFF MIGHTILY...
INDEED, A SELL OFF ON WALL STREET AND A RETURN TO OLD FASHION MACROECONOMIC THEORY MIGHT BE JUST THE TICKET FOR A RETURN TO NORMALCY IN THE GLOBAL ECONOMY...
A MORE DANGEROUS SCENARIO IS THAT WE ARE AT AN HISTORIC INFLEXION POINT IN THE GLOBAL ECONOMY... NOT UNLIKE WHAT HAPPEN TO THE BRITISH POUND IN 1931...
AND 1931 IS A YEAR THAT EVERYONE SHOULD BE STUDYING THESE DAYS!
BECAUSE THERE COMES A TIME WHEN MAJOR RESERVE CURRENCIES SHIFT...PERMANENTLY.
THESE ECONOMIC SHIFTS ARE ALMOST TECTONIC IN THEIR SLOWNESS,
BUT IT DOES HAPPEN...AND UNFORTUNATELY OFTEN WITH ECONOMIC "EARTHQUAKE" LIKE RESULTS RIGHT AT THE VERY END. AS IN 1931!
THE OLD STERLING BASED GLOBALISM OF 1870-1930 SHIFTED TO A DOLLAR BASED GLOBALISM IN 1931.
SO, OUR DEBT DRIVEN DOLLAR BASED GLOBAL ECONOMY COULD BE OVER DUE FOR A CHANGE TO A MORE ASIAN FINANCED AND BASED GLOBALISM...
PERHAPS THE EURO CAN STEP IN AND FILL THE GAP LEFT BY THE DISMAL DOLLAR DEVALUATIONS TO COME...?
NEVERTHELESS, THE DOLLAR SEEMS DOOMED BY DUBYA'S DISMAL DISASTERS...
SO STAY TUNED...THIS COULD GET INTERESTING...MORE ON 1931 LATER.
