Well... You've seen the real nightmare - the German 1923 scenario.
I think the Fed is certainly doing everything in its power to move in
that direction. All that's required is for the Asians to stop buying treasuries.
When they start the selling, we'll get the real collapse of USD.
Unfortunately, I believe this scenario is the most likely scenario,
given the current policies. Unfortunately, it's already proceeding in
that direction. I guess, on the German scale, we are around 1921. If
so, we'll get hyperinflation in 2005. Once that process is in motion,
little can be done to stop it, since all the printing that occured since
1980 is already in the system. There is about 3 times more dollars
than circulating inside the US, due to USD reserve currency status.
When they decide to come home, you get hyperinflation. All the
Fed can do is print, but then you get more of the same. Yeah,
the derivative bubble will be cured by this, but at what price?
If you get hyperinflation similar to Germany, you add around 15 zeroes
to your currency. The result of that? I think, the gold standard may
be re-established, the Federal reserve system abolished. But a lot
of pain may be on the way. This is definitely the worst possible scenario.
Deflation is a lot better.
In that case, perhaps, silver coins are a good insurance. Even pennies
will become more valuable than dollars, due to copper content -ng-
Even the dow will rise, since everything will become more valuable
than the currency. But it will fall first. Turkey is a perfect example of
how this type of collapse happens. It's a zillion times worse than
the currency collapse in SE Asia. I'm really pissed at what they are
doing, but I think they have no choice at this point. They are already
considerably late rasing rates, IMHO. But if they start doing that, stocks
will collapse.
I think real inflation is already in the teens, with real rates at 1%,
regardless of what the government statisticians using hedonics
are telling us. That's just not good at all. The only hope is that
the Asians, and other foreign US debt holders don't start the selling.
Once they do, it's the BK time, in which nothing will help, except
silver bags. I'm buying these now. |
