Prechter: Dollar has Bottomed (But Has It?)

As we've mentioned before, there are two schools of thought regarding the market today. The first group is the inflationist camp, which believe that the increases in money supply will create inflation in prices. The second group is the deflationist camp that believes that the debt levels are so extraordinary that there will be a strong demand for physical dollar currency the world over in order to repatriate debt. This demand will drive the value of the dollar up.

One key group of deflationists is the Robert Prechter-led group at Elliott Wave International. In this video, Prechter reiterates his deflationary thesis and states that believes the dollar has made a significant low. We all know now what the effect of a strong dollar will have on everything else.



While we tend to fall more into the inflationist camp, it's more important to be right in a market like this. Thus, we show the video to show the other side of the story.

We will probably know within a few days to a couple of weeks if the dollar has bottomed or not. There are currently no signs of stress in the credit markets, so we do not yet believe that this should be a bottom. Nonetheless, we must keep constant vigil.