TWO YEARS AGO, in Outlook, I rashly predicted "a very strong economy for 1983 and 1984" and "at least another 18 to 24 months to go" for a global bull market in which "stock markets nearly everywhere participate." The Washington Post does not forget such things and informed me that I would have to come clean about my predictions. Here I am.

The U.S. economy continued to grow through the remainder of 1983 and surged an amazing 6.8 percent in 1984 -- the strongest growth in over 25 years. An astonishing 90 percent of the world's major stock markets, including the United States, are at all-time highs -- several after being in the doldrums for decades. A worldwide bull market of this proportion has not occurred for generations. Sweden and Singapore have declined during this period, but large and small markets nearly everywhere else are booming.

I expected all this to happen because 15 years of stagflation had led to low stock prices. To this, add easy money, overly stimulative fiscal policy, cowed labor unions, surplus raw materials and a lack of inflation. Investors have loved it. Many had never seen the kinds of bull markets that have unfolded. The Germans, the British, the French, even the Italians have not seen anything like it for decades.

The bears at the time were worried about the potential collapse of the international banking system and/or a rise in interest rates. In reality, inflation has remained under control and the U.S. Federal Reserve has played its cards very well. Rather than continuing to lower interest rates in 1983 and 1984, they raised rates modestly as I had hoped.

The rise had the desired effects. The whiff of tight money has ensured that inflation remains dead. Equally important was the scare and the setbacks given the financial markets. Things that go up too far, too fast come down just as fast.

The lack of financial excesses combined with solid U.S. growth ensured the survival of the international banking system. No major debtor has collapsed -- yet.

The result has been national stock market gains from 5 percent in Canada to 287 percent in Mexico.

In 1983 I explained that we would have to reexamine things after two years to figure out what would happen for the rest of the '80s. Markets are now at very high levels, yet the world is a mess. I want to quit the prognostication game while a little bit ahead.

But I will outline a potential nightmare looming on the horizon and make a major prediction in passing.

The U.S. dollar reached unprecedented heights earlier this year as speculators shunned foreign currencies. Most people thought this was a wonderful sign of strength for America. The reality was the opposite. The United States is now the largest debtor nation in the world. In another year or so our foreign debts will exceed all of Latin America's combined. We are running a massive trade deficit and an even larger government deficit. These deficits have been financed by capital seeking high returns in the United States.

Can this go on forever? Not usually. People have been buying dollars and financing the deficits because that has been the profitable thing to do for five or six years -- not because it reflects American economic strength. This has happened throughout history in financial markets, but eventually investors realize the emperor has no clothes.

The speculative purchases of all these dollars and the dollar's resultant strength have led to major disasters in many manufacturing sectors of the United States. It is fine to talk about a service economy, but someone has to actually produce something if the fast food stands are to have customers. Steel, textiles and mining will not survive in America if the dollar goes higher. Protectionism is raising its ugly head.

The Federal Reserve has recognized this situation and has opened the monetary spigots again. Interest rates have fallen significantly in the past few months. Since the economy is still not at full capacity, all this money is sloshing around in the financial markets. Stock markets are at all-time highs and bonds are at multiyear peaks.

There is a strong possibility we are in a wonderful Indian summer that will precede the severest winter in decades.

The Fed is printing money to save the economy, but the smart money understands what is happening. The government really is not going to do anything about the huge deficit, so the currency flows have begun to reverse.

Printing money coupled with massive deficits has always led to soft currencies. Look at England under the socialists or Italy in the '60s and '70s or South America always. All of these countries had varying periods of short term prosperity, but they eventually paid the piper. Money could care less about Democrats, Republicans, faith, color or creed. It's going to avoid undisciplined managers no matter who or where they are.

As the money starts leaving the country, a reflexive or self-reinforcing process develops. The dollar starts falling. Then speculators start paying attention to our huge trade deficit and foreign debts. More money leaves, the dollar falls further, etc., etc. Who's going to finance the deficits at that point? Someone will, but they will demand horrendous interest rates to do so. Bonds absolutely collapse.

The Fed is helpless. Suppose it continues its policy of easy money. Then it is really all over. As the perception of printing money sinks in, the self-reinforcing process becomes even worse. Money flies out of the country. Bonds disappear and interest rates reach unimagined heights. If the government continues to print money, commodities and eventually stocks go up many, many times, but it really will not matter since the currency, the government and ultimately the country go into financial collapse.

If the Fed tries to rein in the money supply, interest rates skyrocket and an already overextended financial structure collapses. The excesses building up in many new speculative instruments, such as index futures and options, lead to a replay of earlier disasters such as the 1930s. Stocks, bonds, real estate, commodities -- everything -- collapse. A revival eventually comes, but that is too far in the future for this article.

The Fed hopes it will be able to fine-tune its actions to avoid all this. It also expects the government to do something about the deficit. The latter appears impossible and will lead to the failure of the Fed's fine-tuning.

I'm not sure how long this Indian summer will last. It could be six months or even a couple of years if commodity prices continue to cooperate.

In the meantime, start moving money out of the country. Buy foreign currencies, or a villa on the Riviera, a Mercedes or even a company which has been badly hurt by the strong dollar. One thing is clear: If Washington does not get its act together soon, a cold, cold winter will arrive before the next decade. Anyone in office when the storm comes will be driven from public life forever.

There will be many opportunities to profit no matter what happens. Just be smart enough to figure out the future, and it will be you who gets asked to write the next follow- up in two years.