biggest sucker rally in history, page-9

kytsym

You seem to know what you're talking about. I have only had a deeper interest in the markets and the global economy and its workings for about three years.
I agree with most of your post. My own conclusions are;

Worldwide we have agreed that the U.S. dollars stands for a proxy of the old gold standard. Many currencies are tied to the U.S. dollar, i.e. their value is tied to it in the same way as gold used to determine the value of a currency.

If the U.S.A. decides to allow market forces to wreak havoc, then many nations would decide to cut their ties to the dollar, which would inevitably make things worse for the U.S. plus their status of super power would be under threat. Hence the intervention of the Bush administration; they'll get the printing presses rolling, after all it's been done before, and they'll stay on top of the heap.

If everyone agrees to continue to allow the U.S. dollar as their currency peg, extra dollars in the markets means they're spreading their loss to the rest of the world. I find it interesting that they've been pressuring the Chinese to debase their currency - at least that's how I understand it. There is also a slight chance that some contenders for super power status will throw a spanner in the works.

So if we all agree to allow the dollar to continue to rule, we will have some form of inflation, rising prices, eventually rising wages worldwide, with just enough economic activity to make this possible, and we'll continue on our merry way. Things should work out if the greed factor can be kept in check, because rising population figures, modernisation etc. will keep putting pressure on demand. More regulation and legislation of financial markets will be necessary.

I believe the central banks in most countries understand this, after all they'r all privately run and are interested in keeping the wheels turning, so they'll play ball.

I also believe we will have a basing movement of the markets with some spectacular rises in specific areas (fertilisers being one of them, specific metals, possibly uranium, some forward-looking technologies and everything connected with it, and - I guess - iron ore being always in demand). This would be the best outcome, but there is no doubt in my mind that we will have upheavals and major changes, hopefully not a war.

A side note: a slowing of the global economy will give us more time to deal with pollution issues.

A lot of 'believes' in the above - I don't have a crystal ball ;-) Please let me know if my thinking is faulty.

Cheers

Taurisk