Transcripts

"Two Ways to Play"-Kevin Depew of Minyanville

SUSIE GHARIB: There are signs that the credit markets are beginning to thaw. But tonight's "Two Ways to Play" says the economy is still not out of the woods. Here's Kevin Depew of Minyanville and Minyanville's Kevin Depew.

KEVIN DEPEW, MINYANVILLE: Credit markets have improved and the stock market has rallied 35 percent over the past few months. But if you think those are good things, think again, because what we are seeing is simply the result of the next great financial bubble: the dollar-based monetary system itself. A dollar today is valuable only to the extent that large numbers of people believe that large numbers of other people will continue to accept it in exchange for valuable things. If that sounds like a confidence game, it's because it is one. And when, not if, that confidence evaporates, the dollar bubble will inevitably collapse. Yes, that's the conventional wisdom. Record-breaking credit expansion will cause stocks and commodities to skyrocket while the poor dollar gets destroyed, in other words, hyper inflation. But what hyper inflationists fail to realize is that for an inflation of either the tame or hyper variety to take place, we have to have both the means -- credit from the Fed and from banks -- and the motive -- the desire to take on more debt. For two years now we have had record amounts of the former, but none of the latter. The risk isn't inflation, but more deflation.