A new missive from Zoltan Pozsar of Credit Suisse brings together the specter of a sovereign debt crisis in the US triggering more QE by next year. Zoltan argues that the Fed will be forced by chokepoint inflation to ease before it wants to in order for governments to spend to solve the very chokepoints causing the inflation. In short, a feedback loop of doom looms for Treasuries.
In today’s dispatch, we will review some news items that we think are relevant to understand near-term tail risks to commodity prices, economic activity and… …funding markets.
In Money, Commodities and Bretton Woods III, we built on Perry Mehrling’s four prices of money framework (par, interest, FX, and price level), adding the four pillars of commodity trading (protection, shipping and foreign cargo as factors that determine the price of commodities that determine the price level in developed economies – Credit Suisse’s “theory of the price level” if you will).
