loki01I actually exited the market around that time due to...

loki01

I actually exited the market around that time due to health issues - I've only just started to look closely at markets again, though I've obviously have been keeping abreast of economic issues during that time.

Unfortunately I've missed the spike in the market since the post-GFC low, but them's the breaks. At least I have my health. :)

On point 1 I'll accept you are right - for some reason I thought it was around 50%, but whatever it is it's an issue. Admittedly at 80 its more of an issue.

Point 2 - the Chinese are finding out the hard way they are importing US monetary policy by default and hence the economic response to that - ie inflation. You are right of course the Chinese are holding the value of the debt owed to them by pegging their currency - but they are still under massive pressure to raise that peg because of the inflation they are effectively importing into their country. They are caught between a rock and a hard place, and I think it will be far more politically expedient for them to raise their currency and effectively lose some of the money the US owes them.

Point 3 - I actually think deflation will be the problem in the medium term rather than inflation - the world is effectively delevering from a lot of debt, governments, individuals etc. That can only cause deflation - its the political response to that deflation, as I outlined in a post above, where I foresee massive inflation following this deflationary period. The reason "massive" is because generally the more this thing goes on the greater the swings will be - the deflationary depths will be deeper and hence the monetary response to that will have to be greater to get economies out of that deeper hole. Hence greater inflation. You've probably heard of the addict analogy used sometimes - it takes a larger dose for the addict to get as high than what they did before. Such will be the case with economies like the US in future.