Reality Nibbles?

The dollar has been plunging, hinting that the World may not be willing to let us run up our credit cards forever. Is this the long prophesied "major correction" taking hold, or just a financial jitter? There are certainly hints that some of our major creditors are getting less willing to let us run our tab:
These concerns were heightened by comments from Wu Xiaoling, deputy governor of the People’s Bank of China, indicating her unease at the rapid build-up of $1,000bn of reserves in China. She said Asian foreign exchange reserves were at risk from the dollar’s fall, although she stopped short of indicating that China was about to stop adding to its pile of reserves.

“The dollar is coming under real pressure and this looks like the beginning of a sustained move,” said Ian Stannard, strategist at BNP Paribas.

Every US War so far has produced a sharp inflationary spike. The most painful flavor is stagflation, when the economy flounders even as prices rise. The Captain has turned on your fasten seatbelts sign.

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