INFLATION/DEFLATION Battle....

As the markets continue to move higher in the midst of the "INFLATION/DEFLATION" battle the tug of war continues. It's very clear, to me at least, that technically the dollar should be the primary catalyst with which to launch which way the market will go. As a technical pattern recognition/trader, I am preparing my strategy for whichever way that it might break! How much money can the corruptocrats print? How many countries will adjust their treasury backed currency from $USD to another currency: the Euro, the Yuan or the Yen? Which countries will switch their oil currency from $USD to other currencies, such as the Euro, the Yuan or the Yen? Could the $USD become the new Currency Carry Trade? For those of you that aren't familiar with the terminolgy, please see the following example of a "yen carry trade":

A trader borrows 1,000 Japanese yen from a Japanese bank, and converts the funds into U.S. dollars, and then buys a bond for the equivalent amount. Let's assume that the bond pays 4.5% and the Japanese interest rate is set at 0%. The trader stands to make a profit of 4.5% as long as the exchange rate between the countries does not change. Many professional traders use this particular type of trade because the gains can become very large when leverage is taken into consideration. If the trader in our example uses a common leverage factor of 10:1, then she can stand to make a profit of 45%.

The big risk in a carry trade, so called, is the uncertainty of exchange rates. Using the example above, if the U.S. dollar were to fall in value relative to the Japanese yen, then the trader would run the risk of losing money. Also, these transactions are generally done with a lot of leverage, so a small movement in exchange rates can result in huge losses unless the position is appropriately hedged and otherwise safeguarded.