>>His bet agaist the dollar probably hasn't played itself out yet<<
I agree. The approaching break in the US Dollar is best illustrated by the global commodity cycle. This boom in world commodity prices has happened many times before. Economically, there is nothing new here to see. The upsurge in global commodity prices is always the last in the sequence of economic events that always follow any extended credit expansion in the global business cycle.
World commodities - especially oil - are still mainly priced worldwide in US Dollars. So far, the Euro has only advanced into the global areas of finance and direct, physical investment, in the process taking all these areas away from the US Dollar.
Once world commodity prices start surging upwards, they can move with astounding speed. This is always followed by a massive upswing in ocean bulk freight rates. Both of these surges, in global commodity prices and ocean freight rates, have already happened. They are now behind us. Over recent months, world commodity prices have fallen sharply. So have ocean freight rates. Now, the world's commodity producers and traders are madly searching for the clearing prices, which will move these commodities. In economic terms, most of the trade still takes place on a worldwide US Dollar basis. The global crisis for the US Dollar will begin when (not if) the US Dollar loses its worldwide status as the main currency in which to trade commodities - especially oil.
The Iranian Oil Bourse is scheduled to start trading oil in Euros on March 20. All other world commodities are certain to follow over time. When that happens, the US Dollar, having been displaced from another globally strategic area of the world's big markets, faces its final crisis. It will fall. |
