Generational Dynamics Forum - New Site

25-Mar-10 News - Portugal's debt rating is downgraded

** 25-Mar-10 News - Portugal's debt rating is downgraded
** http://www.generationaldynamics.com/cgi ... 25#e100325

Contents:
"Hyperinflation versus deflation"
"Euro and other currencies fall as Portugal's debt is downgraded"
"The continuing chaos in Europe"
"Additional Links"

"The dollar is not hyperinflating; it's in a deflationary spiral, which means that the dollar currency becomes stronger and more valuable, not weaker. "

That makes no sense. The euro is another fiat currency. What it does vs. the dollar has no bearing on inflation. Major currencies move relative to each other based on relative interest rates and on the carry trade. In this case, the simplest explanation for the move is that the possibility of European bond default has increased the chance that the ECB will keep interest rates low, so traders sell (borrow) Euros and buy dollars.

The biggest impetus for U.S. inflation will be Chinese inflation and/or a change in the dollar/yuan exchange rate. If the wages for Chinese workers goes up (which it is) or if a revaluation is forced, then not only do prices for chinese junk go up at Walmart, but the entire world-wide manufacturing price levels change as well. If that relieves some unemployment in the U.S. it will eventually be inflationary here as well.