Why The Deflation Model Is Broken

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Deflation is dependent on a stable currency. As the perception of a U.S. Recovery fades away in 2009 and 2010, nations around the world will lose faith in the dollar. Look at the actions of nations around the world, nations are diversifying out of U.S. assets. They are buying fewer treasuries at a time when the U.S. is dependent on borrowing 15 billion dollars every business day just to make ends meet. Russia, China, and others have also repeatedly encouraged the rest of the world to look past the dollar and to start thinking about a new world reserve currency.

Things are bad, but wait till you see interest rates go up. Currently we are being artificially propped up by historically low interest rates, but once they go up, chaos will follow for our economy. My point is, when interest rates go up, we will not see a slow/stable decline (deflation), it will be violent. As interest rates go up, the U.S. will go into something worse than a depression, taking deflation off the table. Once the world pulls the plug on the dollar, its over; the U.S. will experience a major currency crisis.
The current U.S. economy is unrecoverable; it will need to be restructured into a production economy not dependent on constant credit expansion.

* At 6:30 I said the dollar or new U.S. currency may end up being backed by a basket of currencies, I meant to say commodities.


Russia challenges dollar
http://news.yahoo.com/s/ap/20090616/ap_on_re_eu/eu_russia_summit_talks_7

dollar in danger
http://www.reuters.com/article/InvestmentOutlook09/idUSTRE55E6BM20090615

Credit card defaults rise again
http://www.reuters.com/article/newsOne/idUSTRE55E5GQ20090615

Foreign Demand for U.S. Assets falls
http://finance.yahoo.com/news/Foreign-demand-for-US-apf-15524501.html?.v=11


Russia ready to dump dollars
http://www.bloomberg.com/apps/news?pid=20601087&sid=ahoIPyEdpHUI

http://www.marketwatch.com/story/russia-to-reduce-us-treasury-holdings-reports

Interest rates
http://www.marketwatch.com/story/treasurys-down-ahead-of-10-year-note-auction...

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[rlmccullough]

Soryy I hveN't wrote in awhile. I had a stroke. I like t o write and support you & MOt.

revlonnie

[visionvictory]

Rev, I hope you feel better, I'm praying for :)

[at1212b]

What's also very interesting is the current monetary model is based on the absolute need to grow the money supply.

Add the coming problems with health care = disaster waiting to happen.

[nextdimensions]

I don't think the new world currency will maintain today's USD buying power 1>1, there is too much debt in the system being pumped in right now (money creation is debt creation) so what you are saying is essentially equalling a dollar collapse, you will only get so much new currency for that USD that you "hand in", there is absolutely no way you will retain your buying power if a new currency is introduced, that is a currency collapse

[Rebornrat]

I'd like to support your theory but it seems that we're going to watch both inflation and deflation. Inflation in metal prices and oil prices and deflation in prices of the service industry.

I base my understanding in the quantitative theory of money and the laws of supply and demand by Keynes.

The results are the same as in every pessimistic view of economics but what scares me the most is that U.S. policy is doing nothing but to push war on oil rich countries that may retaliate.

[Homocystine]

time will tell.....

[neilcwright]

Interesting stuff. About the dollar, I think as china is rolling out record trade surpluses, the US requires deflation in order to put it's labor market back on a more level field. But it's clear to me that the Fed will not allow this to happen and is hoping it can put pressure on china to inflate to our level instead of have us deflate. Sounds a bit strange but I think stocks may fall when the bond market falls on prospects of rising rates. The treasuries down, stocks up correlation looks over

[getbo]

Prechter has preached that we are facing a deflationary depression - so you don't seem to have bought into what his thinking if you are still worried about inflation. The dollar is getting stronger - deflation model is hardly broken.

[zeusvalentine]

Harry Dent is now predicting a deflationary stock market crash in the next few months. Also, there is 2 Trillion dollars less in the system than just a few years ago - the velocity of money is retracting. Housing was the first sector to feel the pinch of deflation. Look around everywhere else, businesses are not able to increase prices, because people just won't buy. The only sector that has experienced inflation is food, cause they got us by the balls. Anyway, take a look at Dent's new videos.

[austritarian]

Harry Dent wrote the book "The Roaring 2000s". I read it back in the beginning of the decade, and I wasn't impressed. I'm glad I didn't take his advice because instead of the Roaring 2000s it was a crappy decade. Combine that from this advice coming from VisionVictory, a scam artist trained by George4Title. Inflation.us is a big scam. Don't buy any shares in the stocks that they promote. It is a pump and dump scheme.

[kylemacrodot]

Dents courses basically say we have 85 million baby boomers and 105 echo boomers. The echo boomers peak is age 20 so they are all broke right now but we are one of these few countries that have so many of our population in there 30's in the 20's and 30''s... so USA and most countries with a baby boom will go through shitty times all the way until the early 20's... after that many other countries will still be in the crapper but the USA will have a young robust work force through the 20's & 30's

[dannydarias1]

@dannydarias1 Damn was I spot on. 4 months later, this looks like an excellent call. Dollar is up huge against the Euro. Keep watching the pot boys. I need more of these dollar bearish videos. Keep them coming!