Thursday, November 15, 2007
Cash And Carry
Something that rarely gets mentioned in the discussion of the dollar's decline (or oil and gold's climb, or the rise and fall of the sub-prime market) is the extent to which globalization, by freeing the flow of capital, has created a situation where there's an enormous reservoir of cash looking for profit. And since shortterm profit goals surpass longterm growth projections, there's an enormous incentive for speculative bubbles. That's not to say there aren't underlying fundamental causes behind the shifts. But the proliferation of market-moving capital funds with very little restraints on their cash flows plays a role as well.