And a stronger Euro looms...? A stronger Euro could mean higher dollar prices for gold... But gold seems to be recovering on it's own after the big selloff.
The notion that some parts of the economy are "deflating" even while others continue to inflate is odd... And it comes from this strange period of "globalization" that the US economy in particular is in...
The dollar has been "allowed" violate the rules of balance of payments for so long that many people think the dollar is exempt from the normal rules of economics.
But if dollar "exceptionalism" is ever seriously challenged in the markets...the collapse of the dollar would be MASSIVELY inflationary on ALL SECTORS OF THE ECONOMY....
And the uniquely American "slow boat from China" deflation would disappear overnight!
We seem to be in a period where the OLD RULES are coming back...but the NEW ECONOMY CROWD is still ignoring the paradigm shift away from DOLLAR EXCEPTIONALISM...
This could be THE story for 2007 and even the last quarter of 2006,...as big changes take place in Washington after the elections.
