I think the net debt of the US will be written down to zero, perhaps,
at USDX=60, perhaps a bit lower. The reason is that we
hold international assets, while foreigners hold ours. Thus,
as USD drop accelerates, the value of our assets will appreciate,
while the value of foreign assets in the US of A will drop. At
some point we might own more than they do. In addition, if
US goes into recession, which is pretty much guaranteed with
the dollar collapse, we should see a drastic reduction of
the trade deficit, IMHO.
The process of writing down net foreign assets to zero will
be painful for them, so they are quite likely to dump,
and that's why I'm expecting a sharp last leg of the dollar
depreciacion, also known as the dollar crisis -g-
While the total trade deficit was probably in the neighborhood
of $7 Trillion, the net US debt right now is $2.9 Trillion,
so the process is well under way. -g-
The Chinese are just complaining when they issue "nuclear
threat" statements. The value of their holdings is being
decimated. However, if they start selling, it will drop
a whole lot more. The best they can do is, perhaps, target
real assets in the US, which is exactly what some foreigners
are doing with their "Sovereign Wealth funds". |
