There’s a great piece in last wk’s barrons about how these hedge fund mgrs, paul and lee, argue that commodities will go way up in dollar terms only because of a drastic continued decline in dollar purchasing power. I totally agree with this view which is why 80 pct of the money I manage is either in commodity funds or oil drilling stocks (like transocean and diamond offshore).

I’ve searched for the best ways to bet against the dollar and have yet to find an idea I like outside of commodities. I would buy chinese yuan if I could though that’s a bet on when they let it move to its real level against the dollar. (China only raised it 5 pct all of last year.)

I can’t see how the dollar can’t decline given that the fed is dropping rates to save the economy and counter tightening credit markets; meaning rates paid on dollar fixed income deposits will go down relative to other worldwide oppts. It seems that at some point the federal govt will have to start offering higher rates on t-bills as noone will be willing to buy its paper at low these rates.

So what happens when the fed is lending cheap and borrowing high? Seems like that spirals deficits even faster which btw contribute to obama’s calls to raise taxes and ‘pay our fair share’.

Where does this all go? Seems only outcome is higher taxes and interest rates along with record inflation as the dollar dives and real assets esp commodities skyrocket. Assuming that the rich give their money to hedge fund managers who are smart enough to bet on these trends, we end up with even greater concentration of wealth as a very small few avoid the economic landslide and increase wealth while the majority share a fairly equal misery.

I’m normally an optimist and remain hugely optimistic about the future, however, lately I’ve had trouble seeing how we avoid a serious widespread depression and how we come out of it.

The one saving grace is that we remain the country driving tech and net innovation which in addition to creating jobs and wealth in the US drives massive gains in knowledge worker productivity (why I can blog on a late flt rather than reading the inflight mag). These gains seem to keep saving our economy in the face of massive tax revenue paid to the worlds most corrupt, bloated and inefficient corporation.
Sent wirelessly via BlackBerry from T-Mobile.

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