Y'know Maurice... I love Jay.. He is one of the brighest of the posters out here on SI..
But he also likes to play in very fast speculative markets, take his money and run, and look for the next play. Thus, I perceive him often being melodramatic and predicting doom in the short term, but having people construe it as long-term.
Look at the performance of the US dollar since 1995 on a monthly chart:
futures.tradingcharts.com
Now look... the world has been predicting the decline of the USD since at least the beginning of this chart. They were predicting the demise of the USD in 1999 when the Euro came into official use. And here we are over 20% higher since the Euro was introduced.
Personally, I would be HAPPY to see the USD decline, since it would make American goods that much cheaper versus imported goods. Sure it might be a bit inflationary, but we've been in deflation for several years now and that inflation could create higher earnings for some companies (and hurt others).
But what the evidence seems to be indicating is that the US dollar will grow even stronger. Something that will be good for US importers, but very tough on exporters. The pressure on the Japanese economy and the likely devaluation of the Yen in 2002, as well as the uncertainty which will develop now that the "marriage" in Europe has been consumated (easier to be engaged than actually being married), could create instability in Europe, and greater weakness in their currency. Which will then likely lead to more calls for protectionism by US manufacturers.
But from that chart data above, we can see the USD go to as low as 105 and still not break the monthly uptrend.
But you're right that eventually all bubbles will pop. And when the USD crashes, we'll essentially be paying off dollar denominated debts with cheaper dollars and screwing all of those who sold us stuff for those dollars, by giving them a smaller return on those USD when they try and exchange them.
Btw, I do believe that OBL, in his scheme of schemes, has targeted NYC for special attention given its financial importance, as well as it being the location of most of the world's gold reserves. Take that "target" out, and we could see that crash in the USD, and a surge in gold (limited supply, markedly higher demand)...
Given the Arab obsession with gold, I can see him, or his remaining followers attempting to create such a crisis of currencies. Personally, I hope some folks up there in NY and DC caught the hint and are taking steps to decentralized both market operations, as well as holding gold reserves.
Hawk |
