Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

Minyan Mailbag - Economic Optimism?


Figured as much!


Note: Our goal in Minyanville is to remove intimidation from the financial markets and encourage an interactive dialogue among the Minyanship. We share this next discussion with that very intent.

Professor Succo,

First of all, I want to tell you how much I love reading your stuff. You have keen insight and an ability to see things that many, (most), others overlook.

That being said, assuming you are right and the Chinese continue to buy stuff instead of hoarding dollars, the great unraveling may be on our doorstep. Could you think through a couple of optimistic scenarios where the dollar falls substantially further, the U.S. imports some inflation and thus also gives domestic companies pricing power, all within a rising interest rate environment?

(I know it's hard to follow, but it IS a question.)

Thanks in advance,
Minyan Jeff Wachtman
Olympia, WA

P.S. Greenspan said that housing prices were NOT going to fall nationally. Now he "could" be unable to prevent it, but I think it is a statement of how much resolve he has to use whatever is at his disposal to avoid a deflationary outcome. 747's & dollars?


I asked Mr. Practical at lunch a few weeks ago if he thought there was any way out of our current situation (not talking about geo-political risks, just economic risks). He bluntly told me no, he didn't think there was any way out. Mr. Practical is of the Austrian economic persuasion, that is, any economic boom induced primarily through an uncontrolled expansion of the money supply (one that ignores any relationship of the money stock to the velocity of money) eventually must bust. This occurs because the stimulus is introduced into the economy through debt, not an increase in the velocity of money. Eventually the debt burden becomes untenable and a debt correction ensues.

Mr. Practical jokingly suggested that his new idea of "diversification" is having his gold buried in several different places. Upon reflection I am not so certain that he wasn't serious.

To answer your question, however, I can envision a relatively long period of time where this coordinated global monetary expansion can continue. This can occur only if interest rates do not rise and our foreign partners continue to buy our debt unabated. Unfortunately we are already seeing some signs of moderate curtailment as some of Asia's dollar reserves are going into commodities and infrastructure.

The end game will be interesting. There is only a small chance that this will end optimistically. I guess it can if "they" can hold things together AND there are significant technological advances to dramatically increase world-wide productivity. An example of this would be perhaps a significant advancement in alternative energy sources.

So it is a waiting game. I think the bulls would have to wait too long for an optimistic ending.

Prof. Succo

No positions in stocks mentioned.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.

Featured Videos