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Deep Recession or Hyperinflation: Ben to decide soon

The US current account (a negative) plus capital inflows tells us how much money is entering the US economy. In 2003, the US current account deficit was $US 531 Billion, it actually got $US 747 Billion, so net inflows were 216 Billion. In 2004, the US current account deficit was 666 billion; it got 915 billion so net inflows were 249 Billion. In 2005, the deficit was $US 801 Billion - $US 1.025 TRILLION was received, net inflows were 224 billion.But from its high of $US 117.2 Billion in August 2005, the commerce department reports are showing a steady decline in inflows. The flow was down to $US 74 Billion in December and $US 78 Billion in January. When foreign funds no longer cover the current account deficit, the Fed will either have to keep raising rates to attract savings from overseas and watch housing crash or hold off on rate rises and watch the dollar plummet. The Feds choice is now between the long postponed recession or a dollar crash.

This is the reason why I expect gold to go to $US800.00 before the next serious correction.


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