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["Don Bowen" <don.bowen AT earthlink.net>]

> Don, if I understand basic math and economics, what will happen next is
> treasuries will lose value because so much new debt is being sold.  New
> treasuries, flooding the market , will have to pay higher interest rates.
> Inflation begins, the dollar loses strength.

The real concern is if countries stop loaning us the money at the current
rates.  As foreign exchange falls and countries need to stimulate their own
economies the US will have to offer ever higher rates to attract the money.
There are altogether too many balls in the air.  Some will have to fall.

> How long it takes for this to play out, I don't know.  But, I do not
> believe what all of the financial analysts and economists are saying
> about a deflationary recession.

I think it may be a toss up.  If world wide demand falls then prices may
fall as producers try to clear out stock.  On the other hand (Where is that
one handed economist when you need one?) the world is awash on money right
now with all the bailout money floating about.  Too much money chasing too
few goods is a recipe for inflation.

I think the best we can hope for is some form of stagflation, stagnant
growth with monetary inflation. 
 
> They are right so far, the dollar is strong as h*ll, worldwide.  But, too
> much debt (money) is flooding the market.  Inflation must be the
> inevitable conclusion

The Dollar is strong mostly because other currencies are weak.  Many
investors are seeing the dollar as a safe haven.  That is why treasuries are
still attracting borrowers with effective interest rates below 0.  

In some ways right now the music if going faster than the monetarists can
dance to.

Don Bowen  KI6DIU
http://www.braingarage.com/Dons/Travels/journal/Journal.html