AN INFLATIONARY MONETARY POLICY WILL EVENTUALLY BACKFIRE ON THE ECONOMY...THE RETURN OF HIGH RATES AND STAGFLATION IS PREDICTED.
BUT CAN THE AMERICAN PUBLIC "SETTLE FOR" A WEAKER DOLLAR...IN RETURN FOR NOMINALLY HIGH STOCK, REAL ESTATE AND ASSET PRICES... THAT DEPENDS ON THE WILLINGNESS OF CHINA AND OTHERS TO CONTINUE ACCEPTING THE DEVALUED DOLLAR "AT PAR"...
THE NOTION OF AMERICAN EXCEPTIONALISM IS REALLY ON THE BLOCK NOW... MY HUNCH IS THAT WE ARE SEEING A TRANSITION PHASE AWAY FROM THE DOLLAR...MUCH LIKE WHAT HAPPEN IN THE 1930-1950 PERIOD WHEN THE UK POUND BECAME A SECOND CLASS CURRENCY.
THE ABANDONMENT OF BRETTON WOODS IN 1971 SET IN MOTION A SERIES OF UNFORTUNATE EVENTS WHICH GAVE US THE CRISIS OF THE 70's INFLATION...
WHEN DEVALUATION BECOMES THE POLICY OF MAJOR CENTRAL BANKS...TROUBLE IS ASSURED.
I WOULD EXPECT GOLD AND OIL TO GO UP...AND AMAZINGLY STOCKS TO HOLD NOMINALLY HIGHER BASED SOLELY ON THE DOLLAR'S DEVALUATION.
WE ARE ALL GOING TO BECOME "ITALIAN MILLIONAIRES!"
