Inflation: Understanding the Current Economic Crisis and How to Protect Yourself - Page 4

JetsCrazey · 06-11-2008, 08:58 PM

[QUOTE=Black Death;2579775]US $ and yen, TBH.[/QUOTE]

How will the dollar overcome all this:

1)The Federal Reserve is adding hundreds of billions in liquid cash to the money supply, these loans will 100% be rolled over otherwise the banks are once again under their capital requirements
2)The Federal budget deficit is about to go much higher because of an impending decrease in tax receipts.
3)The slowdown in business will also be exacerbated by a reversal of the Bush tax cuts
4) we have higher food and energy prices being imported from abroad due to fundamental demand increases in the developing world. Global supply numbers are dwindling in grains and oil, two consumer staples which everyone consumes.

but most of all, i reiterate, too much slowdown in business will lead to widespread derivative defaults, which will then create more slowdown and cause even more derivative defaults, and the system like such implodes upon itself like a house of cards because of that first wave of default. If this happens you will have peasants with pitchforks. In the days of fiat currency this will never happen. In Economics 101 you are taught that inflation is better than deflation and the economist running the Fed, Professor Ben from Princeton, agrees with me.

Soberphobia · 06-11-2008, 10:10 PM

[QUOTE=JetsCrazey;2579841]How will the dollar overcome all this:

1)The Federal Reserve is adding hundreds of billions in liquid cash to the money supply, these loans will 100% be rolled over otherwise the banks are once again under their capital requirements
2)The Federal budget deficit is about to go much higher because of an impending decrease in tax receipts.
3)The slowdown in business will also be exacerbated by a reversal of the Bush tax cuts
4) we have higher food and energy prices being imported from abroad due to fundamental demand increases in the developing world. Global supply numbers are dwindling in grains and oil, two consumer staples which everyone consumes.

but most of all, i reiterate, too much slowdown in business will lead to widespread derivative defaults, which will then create more slowdown and cause even more derivative defaults, and the system like such implodes upon itself like a house of cards because of that first wave of default. If this happens you will have peasants with pitchforks. In the days of fiat currency this will never happen. In Economics 101 you are taught that inflation is better than deflation and the economist running the Fed, Professor Ben from Princeton, agrees with me.[/QUOTE]

If you look at the response by every 1st world central bank in the last 50 years to rapidly-increasing inflation, a situation we face now, you will find the central bank has chosen the path of killing inflation and deliberately softening the economy, rather than boosting inflation and strengthening the economy.

US rates are at historical lows comparative to international rates - they really can't go much lower - even on that pretext alone, and discounting other fundamental factors, the US $ should go up from here.

JetsCrazey · 06-12-2008, 07:50 AM

[QUOTE=Black Death;2579941]If you look at the response by every 1st world central bank in the last 50 years to rapidly-increasing inflation, a situation we face now, you will find the central bank has chosen the path of killing inflation and deliberately softening the economy, rather than boosting inflation and strengthening the economy.

US rates are at historical lows comparative to international rates - they really can't go much lower - even on that pretext alone, and discounting other fundamental factors, the US $ should go up from here.[/QUOTE]

they certainly can go lower. they can go to zero. and they probably will. They definitely aren't going up because it would kill the credit markets. The ECB however might raise, and that differential is dollar NEGATIVE.

Soberphobia · 06-12-2008, 08:02 AM

[QUOTE=JetsCrazey;2580143]they certainly can go lower. they can go to zero. and they probably will. They definitely aren't going up because it would kill the credit markets. The ECB however might raise, and that differential is dollar NEGATIVE.[/QUOTE]

Which would hugely boost inflation - just can't see it happening, mate.

Soberphobia · 06-17-2008, 07:58 AM

I have downgraded my outlook on oil.

I expect oil to be trading at $75 a barrell by 2nd/3rd quarter next year. That is the very top of the range I expect to be trading in. From a technical perspective, oil has formed several double tops in recent weeks - not a good technical sign for further bullish movement, but in a bubble phase, any price is possible.

The number of oil contracts traded has increased 20 fold since when oil was $58 a barrell - yet the demand for oil has basically remained static during that time - and now oil is over US $130 a barrell.

In other words, a huge amount of the increase in the price of oil is down to speculation.

Oil traded at US $40 a barrell in 1980 - in 1986 it traded at US $6 a barrell. I expect a fall in the price of oil of similar magnitude in coming years.

JetsCrazey · 06-17-2008, 12:43 PM

[QUOTE=Black Death;2586770]I have downgraded my outlook on oil.

I expect oil to be trading at $75 a barrell by 2nd/3rd quarter next year. That is the very top of the range I expect to be trading in. From a technical perspective, oil has formed several double tops in recent weeks - not a good technical sign for further bullish movement, but in a bubble phase, any price is possible.

The number of oil contracts traded has increased 20 fold since when oil was $58 a barrell - yet the demand for oil has basically remained static during that time - and now oil is over US $130 a barrell.

In other words, a huge amount of the increase in the price of oil is down to speculation.

Oil traded at US $40 a barrell in 1980 - in 1986 it traded at US $6 a barrell. I expect a fall in the price of oil of similar magnitude in coming years.[/QUOTE]

Interesting. I see oil making a run at $150 and possibly $170.
The Fed has checkmated itself in the past week. The markets have priced in 2 rate rises but the Fed is now saying it will hold steady.
The ECB will probably raise rates soon and this will increase the DIFFERENTIAL between the 2 currencies in favor of the Euro. This is DOLLAR NEGATIVE.

The EUR/USD will clear 1.60 by September and then it's on to $1.65-$1.70 at the very least, probably even more now that the Fed has lost credibility.

Soberphobia · 06-17-2008, 08:46 PM

[QUOTE=JetsCrazey;2587309]Interesting. I see oil making a run at $150 and possibly $170.
The Fed has checkmated itself in the past week. The markets have priced in 2 rate rises but the Fed is now saying it will hold steady.
The ECB will probably raise rates soon and this will increase the DIFFERENTIAL between the 2 currencies in favor of the Euro. This is DOLLAR NEGATIVE.

The EUR/USD will clear 1.60 by September and then it's on to $1.65-$1.70 at the very least, probably even more now that the Fed has lost credibility.[/QUOTE]

Your price targets are entirely possible - this is after all a bubble where no rationality rules.

The Fed might well have to hold off on raising interest rates because the US economy is tanking.

06-11-2008, 08:58 PM	#61
JetsCrazey All League Join Date: Aug 2005 Posts: 2,665	[QUOTE=Black Death;2579775]US $ and yen, TBH.[/QUOTE] How will the dollar overcome all this: 1)The Federal Reserve is adding hundreds of billions in liquid cash to the money supply, these loans will 100% be rolled over otherwise the banks are once again under their capital requirements 2)The Federal budget deficit is about to go much higher because of an impending decrease in tax receipts. 3)The slowdown in business will also be exacerbated by a reversal of the Bush tax cuts 4) we have higher food and energy prices being imported from abroad due to fundamental demand increases in the developing world. Global supply numbers are dwindling in grains and oil, two consumer staples which everyone consumes. but most of all, i reiterate, too much slowdown in business will lead to widespread derivative defaults, which will then create more slowdown and cause even more derivative defaults, and the system like such implodes upon itself like a house of cards because of that first wave of default. If this happens you will have peasants with pitchforks. In the days of fiat currency this will never happen. In Economics 101 you are taught that inflation is better than deflation and the economist running the Fed, Professor Ben from Princeton, agrees with me. Last edited by JetsCrazey; 06-11-2008 at 09:00 PM.

06-11-2008, 10:10 PM	#62
Soberphobia All League Join Date: Dec 2005 Posts: 3,440	[QUOTE=JetsCrazey;2579841]How will the dollar overcome all this: 1)The Federal Reserve is adding hundreds of billions in liquid cash to the money supply, these loans will 100% be rolled over otherwise the banks are once again under their capital requirements 2)The Federal budget deficit is about to go much higher because of an impending decrease in tax receipts. 3)The slowdown in business will also be exacerbated by a reversal of the Bush tax cuts 4) we have higher food and energy prices being imported from abroad due to fundamental demand increases in the developing world. Global supply numbers are dwindling in grains and oil, two consumer staples which everyone consumes. but most of all, i reiterate, too much slowdown in business will lead to widespread derivative defaults, which will then create more slowdown and cause even more derivative defaults, and the system like such implodes upon itself like a house of cards because of that first wave of default. If this happens you will have peasants with pitchforks. In the days of fiat currency this will never happen. In Economics 101 you are taught that inflation is better than deflation and the economist running the Fed, Professor Ben from Princeton, agrees with me.[/QUOTE] If you look at the response by every 1st world central bank in the last 50 years to rapidly-increasing inflation, a situation we face now, you will find the central bank has chosen the path of killing inflation and deliberately softening the economy, rather than boosting inflation and strengthening the economy. US rates are at historical lows comparative to international rates - they really can't go much lower - even on that pretext alone, and discounting other fundamental factors, the US $ should go up from here.

06-12-2008, 07:50 AM	#63
JetsCrazey All League Join Date: Aug 2005 Posts: 2,665	[QUOTE=Black Death;2579941]If you look at the response by every 1st world central bank in the last 50 years to rapidly-increasing inflation, a situation we face now, you will find the central bank has chosen the path of killing inflation and deliberately softening the economy, rather than boosting inflation and strengthening the economy. US rates are at historical lows comparative to international rates - they really can't go much lower - even on that pretext alone, and discounting other fundamental factors, the US $ should go up from here.[/QUOTE] they certainly can go lower. they can go to zero. and they probably will. They definitely aren't going up because it would kill the credit markets. The ECB however might raise, and that differential is dollar NEGATIVE.

06-12-2008, 08:02 AM	#64
Soberphobia All League Join Date: Dec 2005 Posts: 3,440	[QUOTE=JetsCrazey;2580143]they certainly can go lower. they can go to zero. and they probably will. They definitely aren't going up because it would kill the credit markets. The ECB however might raise, and that differential is dollar NEGATIVE.[/QUOTE] Which would hugely boost inflation - just can't see it happening, mate.

06-17-2008, 07:58 AM	#65
Soberphobia All League Join Date: Dec 2005 Posts: 3,440	I have downgraded my outlook on oil. I expect oil to be trading at $75 a barrell by 2nd/3rd quarter next year. That is the very top of the range I expect to be trading in. From a technical perspective, oil has formed several double tops in recent weeks - not a good technical sign for further bullish movement, but in a bubble phase, any price is possible. The number of oil contracts traded has increased 20 fold since when oil was $58 a barrell - yet the demand for oil has basically remained static during that time - and now oil is over US $130 a barrell. In other words, a huge amount of the increase in the price of oil is down to speculation. Oil traded at US $40 a barrell in 1980 - in 1986 it traded at US $6 a barrell. I expect a fall in the price of oil of similar magnitude in coming years.

06-17-2008, 12:43 PM	#66
JetsCrazey All League Join Date: Aug 2005 Posts: 2,665	[QUOTE=Black Death;2586770]I have downgraded my outlook on oil. I expect oil to be trading at $75 a barrell by 2nd/3rd quarter next year. That is the very top of the range I expect to be trading in. From a technical perspective, oil has formed several double tops in recent weeks - not a good technical sign for further bullish movement, but in a bubble phase, any price is possible. The number of oil contracts traded has increased 20 fold since when oil was $58 a barrell - yet the demand for oil has basically remained static during that time - and now oil is over US $130 a barrell. In other words, a huge amount of the increase in the price of oil is down to speculation. Oil traded at US $40 a barrell in 1980 - in 1986 it traded at US $6 a barrell. I expect a fall in the price of oil of similar magnitude in coming years.[/QUOTE] Interesting. I see oil making a run at $150 and possibly $170. The Fed has checkmated itself in the past week. The markets have priced in 2 rate rises but the Fed is now saying it will hold steady. The ECB will probably raise rates soon and this will increase the DIFFERENTIAL between the 2 currencies in favor of the Euro. This is DOLLAR NEGATIVE. The EUR/USD will clear 1.60 by September and then it's on to $1.65-$1.70 at the very least, probably even more now that the Fed has lost credibility.

06-17-2008, 08:46 PM	#67
Soberphobia All League Join Date: Dec 2005 Posts: 3,440	[QUOTE=JetsCrazey;2587309]Interesting. I see oil making a run at $150 and possibly $170. The Fed has checkmated itself in the past week. The markets have priced in 2 rate rises but the Fed is now saying it will hold steady. The ECB will probably raise rates soon and this will increase the DIFFERENTIAL between the 2 currencies in favor of the Euro. This is DOLLAR NEGATIVE. The EUR/USD will clear 1.60 by September and then it's on to $1.65-$1.70 at the very least, probably even more now that the Fed has lost credibility.[/QUOTE] Your price targets are entirely possible - this is after all a bubble where no rationality rules. The Fed might well have to hold off on raising interest rates because the US economy is tanking.