you sir are an idiot.
you dont short markets in a correction trying to catch a bull market.
also we are not in deflation strictly speaking, can you honestly say that the trillions being pumped into the financial system are contracting the money supply?
credit used to (and actually still does) give us a eye-boggling amount of leverage for each dollar that exists. once that leverage is no longer available, people still need it for day to day activity which means they use a much higher dollar/debt ratio than they would have used too meaning higher demand for dollars. either way the value of the dollar is still increasing despite the amount of injection the government is doing whether it be disinflation or deflation.
another way to look at it is to put credit and the dollar in the same category since the dollar really is based off nothing, it's just a piece of paper we give value too, hence it pretty much is just credit just as debt itself is a number represent these things we call dollars.
If there is $3 and $7 of debt, the money supply is $10, yet when you take away $6 of debt (the credit crunch) and add in $3 more dollars (the government injections), then you have $6 dollars and $1 a debt. This leads to a lower supply. Now on the demand side, the people still need the supply to be $10 to get their business deals and the like done, so they increase the value of the dollar to make up for the debt not there leading to higher demand. A lower supply and a higher demand always leads to a higher value.
dollar amounts stayed the same, but yet usdx would collapse and youd be looking at hyperinflation. the only thing to put a floor to the dollar at that point would be remonetizing gold. this brings us back to the original formula: outstanding foreign treasury obligations / oz's at fort knox.
default on debt = best solution
fuck em.