The coming US dollar crisis Message Board

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Strategies & Market Trends : The coming US dollar crisis

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To: SouthFloridaGuy who wrote (7013)	5/6/2008 2:38:45 PM
From: Real Man	Read Replies (3) of 71456

The key distortion as I see it is the blossoming of financial economy, which produces nothing, while the real economy (US manufacturing base) has been exported in search for cheaper labor. These are the distortions, and they are not bullish for the dollar. The Fed's key mechanism has been to socialize risk by injecting liquidity and stabilizing the derivative markets. Lately the government and the Fed took much of the risk for the huge mortgage bubble, while cutting taxes. They can't possibly handle that. Once the Fed's balance sheet gets crapped to the limit, they have to stop or print. The government won't stop operating. Once they run out of money, the Fed has to print and buy their debt. And yes, the US government is very insolvent. At that moment you'll have hyperinflation.

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