The coming US dollar crisis Message Board

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Strategies & Market Trends : The coming US dollar crisis

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To: Sober who wrote (16434)	1/19/2009 12:24:38 PM
From: stsimon	Read Replies (3) of 71456

>>Does anyone have any idea how the dollar could possible avoid a decrease in value with all the printing that is currently going on.<< The dollar collapse thesis is based on a few basic assumptions: 1) U.S. monetary policy is run by idiots 2) When the velocity of money recovers those idiots won't drain the excess liquidity that they added during the crisis. 3) The U.S debt will continue to expand causing foreign bond holders to dump their massive treasury holdings. 1) was a reasonable assumption under the idiot Bush the Younger, but he is now history. 2) The Fed will drain liquidity when inflation returns. 3) The U.S. Government has unlimited taxing power as we saw after WWII when to repay war time debt marginal income tax rates were as high as 92.5% under Eisenhower. Once the economy recovers expect taxes to go up a lot. I believe moderate inflation may well return, but not enough to make gold any more attractive than other commodities. If you really expect the end of the world you'd be better off with a stockpile of food, water, ammunition, and medicine rather than gold.

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