I will go out on a limb and say that next week will be the bloodiest week in the history of Wall St.

This week was volatile enough, but stayed on course. The course is the bottom of a canyon, yes we just flew off a cliff in a freight train. We are still in the air, but the landing is going to be really, really rough.

Could we see 1,200$ gold, and 120$ oil next week? I'd give it a 50/50 chance. Dow 10,000? Maybe. Dow 10,500.......probably.

My 2 month outlook is pretty grim.

DT, I'm expecting the DOW to be in the 9500 range before this is all over. If oil is expected to run into the 120-125 range then that means more drops in the Dollar. It's our buying power that us being altered to hold the stocks at bay. When Dollar drops, we pay more for oil. Raising the price of oil is just a way of rest OPEC countries to say they are more valuable than the Dollar is worth. The problem is, our commodities are not viewed favorably anymore thus the world is putting less value on the US. This deflates the Dollar and the stock market goes with it. Most US businesses are based on the Dollar which is why many are not International which allows them to parcel out the company into holdings in different countries. Sure their base value still drops but their overall holdings keep them on a more stable footing.

This looks like the biggest conspiracy around now far overshadowing the war(s).

i think the hyperinflation will hit us around august 2008.

with iran stockpiling oil in vlcc's off their shore, they are driving up oil transport rates and oil prices. i just read that iran now has about 5 days of production stockpiled off of their shore. this is keeping the oil and the tankers off the market and driving up the price.

i could see iran moving toward even more euro transactions as the US becomes increasingly belligerent. i think foreign central banks would naturally dump their dollars for euros and that would leave the planet saturated with federal reserve notes. the value of the dollar would plummet, instantly jacking prices up through the roof. the middle class will quickly be wiped out and treasury yields will go through the roof. in an effort to control the market for treasuries, the fed may try to print money and buy the bonds themselves through quantitative easing.

should the fed engage in quantitative easing, the amount of money needed to mop up the treasuries will be absolutely massive, ESPECIALLY if they try to make it look like things are hunky dory by offering such high prices for the bonds as to keep their yields low. i believe the middle class would be wiped out in a matter of days.

as prices go through the roof, americans will realize that they have been living on borrowed credit card debt and home equity for far too long and they will see that the debt pyramid was an illusion. since americans have a negative savings rate, they will not have any money in savings to buy stuff and the high prices will quickly max out their remaining credit cards. the mortgage industry is already down, so i wouldn't count on anybody refinancing their home to pull the remaining equity out and since the banks would already be clued in about the credit crisis and hyperinflation, they wouldn't dare make home equity lines of credit.

of course, since people would come to the realization that they really are as broke as they didn't want to think they are, they would realize as well that you need money , not credit, to buy food and energy. i am sure the socialist states of america would then open an office where you could go pick up paper currency to buy groceries. we would then be handing out free cash to keep the masses pleased and able to buy bread, but since you have to print money for nearly every single person out there, the hyperinflation would just run run run.

i wonder how we would support the troops then? i wonder if our dollars would even be worth enough to buy some gas for our ships so that we could bring them home?

how much did you pay for that loaf of bread? oh, a cool trillion...

Right now, there are many people not terribly upset about the war we're in. In their minds, the war seems more or less justified based on vague, but nice-sounding ideas of why we're in there.

Their irritation is pacified by the fact that taxes haven't been raised to any significant extent to pay for this war. So, for them it seems as though the war can continue without any real effects being felt at home.

What they don't understand, and what they don't see coming is how the money system is paying for this war and what the consequences will be.


First, banks create money. The Fed has been doing this for a long time. Right now, congress is voting to give Bush more money for this war, but they're not collecting any more taxes than usual. So where is this money coming from? The Fed. Don't let the obfuscation of US bonds distract you, this is just an effort to appease those who want a share in the profits of war, and to give the public someone to point their finger at when they think the money is coming from somewhere. The Fed is creating it.


Then, the government spends this newly-created money. The big defense contractors, the war profiteers, Halliburton, KBR, Dick Cheney Inc. are all making a killing with this money. The war drags on.


The new money acts like water in a bowl of soup. It dilutes the value of the dollar. You may not see it now, but eventually... when you go to the grocery store or try to fill your car up with gas... you're going to be in for a surprise. The cost of all these goods is going to go up. But your wages haven't.


This is just the beginning. The more this government spends of this monopoly money, the higher and faster the inflation will continue.


So, long story short, we are paying for this war with inflation.


Knowing that, maybe a few more people in this country would find themselves irritated with the tremendous cost of this war, when this chicken actually comes home to roost and hits the American consumer squarely in the pocketbook.


Inflation is the cost of war. How do you like them apples?

With freddie and fanny set for bailout, we shall see more liquidity pumped, and the dollar fall more.

It sucks that this stuff is happening before our eyes.