The Supercycle of Debt

Debt and the dollar, employment and interest rates, the US economy and world trade, money supply and inflation/deflation, taxes, deficits, commodity prices, politics, war, regulation plus a host of other variables. They are all related in a very complex and dynamic fashion. Changing one of them may change each of the others in often unpredictable ways, which in turn affect all the others. Today, we start a series trying to understand how they fit together and what the implications are for our investments.

We are in a stimulus driven recovery. As noted last week in my 2004 predictions, I think it will last for most of this year, if not the entire year. Yet, easy money and stimulus are not without a price. Messing with a free market is a perilous task. On the other hand, to have not acted would have insured a double-dip recession of what I think would have been of serious proportions. Will…