US inflation

There is only one type of inflation, despite what others may say, and it is monetary inflation. Price increases, which many like to call inflation is, instead, a result of inflation but not inflation in itself.

When more paper is produced the long term effect is to decrease the value of the currency that paper is in. Therefore, it then takes more of those dollars to buy the same products. Hence, the increase in Real Estate in the US is not purely organic. While some of it may be due to real growth, most of it is due to a depreciation of the currency of that paper - USD

Since the USD has dropped as much as 50% against some currencies over the past 5 yrs, it is, therefore, safe to say that properties that cost 250K USD 5 yrs ago and are worth 500K USD today in the US, really are still worth 250k US in other currencies e.g. the Canadian Dollar. As a matter of fact in those foreign currencies the value of those US properties have actually decreased.

The attempt by the US Government to avert the disaster, by reducing interest rate, will fail, IMO. There is too much of the garbage paper in all corners of the world today. I give credit to the US for one thing and that is; hyping the paper that it created so much that convinced bankers all over the world bought it, hence, the whole world will be affected by the US crisis.

There is sure disaster ahead and there is no way out of it. Some predictions I made about two years ago:

There will be economic trouble in the US by the end of 2007
There will be economic disaster in the US by the end of 2008
The Dow will drop at least 50% from its high by the time the bear market is over
Gold will reach 2k by 2011
If the Dow increases instead of decrease then gold will reach 3k

I still stick to these predictions.