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Strategies & Market Trends : The coming US dollar crisis
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To: Real Man who wrote (18893)3/20/2009 7:45:16 AM
From: gregor_us  Read Replies (2) of 71454
 
I've been enjoying Denninger of late, but the second half of that essay in which he says the USD basically goes to infinity before the final collapse makes no sense. His writing gets so incoherent, he fails to make the case.

I do know of some people who hold this view, however. Rather than disagreeing with Denninger, I would simply like for him to take another whack at the USD-to-infinity idea.

Despite the dollar-denominated-loans dynamic, the world remains very long dollars and dollar equivalents--like treasuries. In any new, big round of deleveraging, with upward pressure on the USD to repay USD-denominated loans--at some point this dollar demand will be more than satisfied by holders of USD and USD equivalents looking to convert their holdings not into USD but into other currencies, and other assets.

I still maintain the view that the USD is the largest long position in the world. Just seems like a basic definition of a reserve currency.

G
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