What is the inevitable conclusion to this world financial crisis?
1) The US dollar must drop but it will drop slowly over the next decade or so. It will not be caused by a sell off in Asia.
2) This will increase US exports and decrease the US trade deficit.
3) This will slow global growth and so most commodity prices will not increase much in dollar term despite the dollars weakness.
4) US nominal wages will rise and US denominated debts will shrink in real terms.
5) Gold should increase in dollar terms as it becomes a more stable source of money.
6) China will suffer as it needs to decrease exports and increase consumer spending as a percent of GDP.
7) US treasury yields will increase but not very much. The Federal reserve will absorb more and more treasuries and allow the dollar to weaken as it needs to do.
8) A long period of slow growth and poor returns to capital will prevail.
9) The best sectors will be US exports with foreign currency exposure and recession resistant business models, healthcare companies should do the best, JNJ, PFE, MDT etc.
10) US military spending will decrease. US will rely more on its allies for security.
