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- May 19, 2007
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A Stronger Dollar: After Many a Summer Dies the Swan
This is the kind of situation that tends to wobble forward from momentum until it hits a crack in the pavement, some trigger event, then topples into a ditch and a full blown crisis, often when we least expect it.
I have not been reading many other financial blogs lately, giving more time to family and preparing for what is to come. I wonder if the more strident true believers in a stronger dollar through deflation have relaxed belief in the improbable yet, or if they are still flogging the data to support a mistaken theory.
Its one thing to be wrong. Everyone is, at one time or another, including yours truly. But its especially costly, sometimes fatally so, to be stubborn after your time has come and gone.
If equities take another leg down, as we suspect they will, then the dollar will strengthen once again, perhaps impressively. But it is just a shifting in allocations in a dollar universe that is changing, often slowly, into something that will likely be quite different, as in a black swan event.
As you know the position we took on this question was to make the case that in a fiat currency regime a range of outcomes are technically possible (and still are). But the probability of inflation was overwhelming when the facts were considered dispassionately.
As a general rule, the louder the rhetoric, the weaker the case to be made for a viewpoint.
Look at the data and be guided by it in all other things of this world.
This is the kind of situation that tends to wobble forward from momentum until it hits a crack in the pavement, some trigger event, then topples into a ditch and a full blown crisis, often when we least expect it.
I have not been reading many other financial blogs lately, giving more time to family and preparing for what is to come. I wonder if the more strident true believers in a stronger dollar through deflation have relaxed belief in the improbable yet, or if they are still flogging the data to support a mistaken theory.
Its one thing to be wrong. Everyone is, at one time or another, including yours truly. But its especially costly, sometimes fatally so, to be stubborn after your time has come and gone.
If equities take another leg down, as we suspect they will, then the dollar will strengthen once again, perhaps impressively. But it is just a shifting in allocations in a dollar universe that is changing, often slowly, into something that will likely be quite different, as in a black swan event.
As you know the position we took on this question was to make the case that in a fiat currency regime a range of outcomes are technically possible (and still are). But the probability of inflation was overwhelming when the facts were considered dispassionately.
As a general rule, the louder the rhetoric, the weaker the case to be made for a viewpoint.
Look at the data and be guided by it in all other things of this world.
