Dot Com Bubble, Real Estate Bubble, and the coming __ Bubble

[HerefordSire]

. It reflects a monetary increase of 305 billion dollars into the US money supply in the short space of under 2 months. Nothing like this has ever happened in the USA before!

It reminds of some Latin American economic policies in the 80s. What happened there, was everybody who had anything converted their currencies into us dollars and the home grown currency plummeted in value. The skunk in the works here though is the size of the US economy. The Euros tried that over the summer. They were literally laughing at the weak dollar. Suddenly French wines and cheese were priced out of American markets and American manufactured goods flooded foreign markets causing foreign factories to slow down production launching this recession. Their currencies had to reverse that situation. One fears that people will dump their dollars for gold, but realistically the American public (and even apparently that includes the hedge funds!) has very little cash anyway. Most of them are in debt to their eyeballs and that debt is in dollars. I think gold is going up versus all paper currencies; but I am not certain that really matters to the macro economic picture all that much. I am not convinced that pumping up the money supply is going to lead to a devaluation in the near term (and I think that chart is understating the true money supply increase).

I don't know if you caught this in one of my recent posts.....The Euro currency can become obsolete very easily in the coming months. For example, let's say 10 Great Britain banks fail and they are bailed out by the Queen. The Euro will be affected along with the Pound. However, each foreign European country will only support their own failures by their own taxpayers as surely one country cannot bail out all of Europe. The United States of America may be an exception (to helping other country failures) as the US Dollar is the most liquid currency.

 

[Brandonm22]

Even when the Euro was kicking butt and taking names this Spring/Summer I had no confidence in it longterm. IT is just another free floating paper currency with only hypothetical value; but unlike the dollar (or the ruble for that matter) the member nations don't HAVE to stand behind it. A seperatist minded govt can come to power, walk away, and go back to printing their own currency with one election. I am not predicting that this WILL happen; but nationalism is a spectre that hangs over everything the EU tries to do and it adds more risk to Euro holders.

 

[HerefordSire]

I haven't looked at the link. The chart is scary enough. Anyone remember the 70's? Huge inflation, huge interest rates, oil crises, Islam on the rampage (in Iran), commodity spikes and commodity collapses. I'm getting a headache from the deja-vu.

I remember waiting in line for gasaoline. I remember the Iran hostage crisis and Khomeni. I do not recall inflation but I do recall high interest rates received for funds in money markets. This is a little different than the 1970s though but I agree there are many similarities.

 

[1982vett]

I haven't looked at the link. The chart is scary enough. Anyone remember the 70's? Huge inflation, huge interest rates, oil crises, Islam on the rampage (in Iran), commodity spikes and commodity collapses. I'm getting a headache from the deja-vu.

I remember waiting in line for gasaoline. I remember the Iran hostage crisis and Khomeni. I do not recall inflation but I do recall high interest rates received for funds in money markets. This is a little different than the 1970s though but I agree there are many similarities.

Ahh, the good ole days of 14% - 16% home loans. Glad I didn't have a 6.5% one as it seems nobody can afford those. :???: Well, it might have actually been the '80s.