The US will likely experience a tsunami in which the dollar
will lose at least a couple of zeroes in purchasing power
over time. The key reason
is that US is no longer a capitalist society, it is a corporate
welfare command economy, which results in great misallocation
of capital (thus, we saw a lot of "bubbles"). In a way the
eventual crisis has to be similar to the breakdown of the Soviet
Union. There is no way out of this, except restructuring and
the restoration of honest money. Unfortunately, we already
had a lost decade, during which even more misallocation
and more command economy happened. This is still rolling
downward. Most likely eventual scenario is hyperinflation,
then the return of the gold standard.
IMHO.
This is a very pessimistic scenario, but the command economy
essentially robbed US of its industrial base. Essentially
the build up to the current crisis started when US abandoned
honest money and started to abuse the privilege of printing
the reserve currency.
My wild prediction stands - the world will be back to honest
money, as there is always a way to abuse the privilege of
being part of the basket of currencies, if the ratio in
that basket is fixed. Right now we
are seeing a bit of a fight among countries to be included
in the basket - everyone wants money for nothing. At some
point nobody will want to hold the bag. The downfall of the
US started with the introduction of the first competitor for
reserve currency, the Euro. At this point more competitors
will be introduced.
"By a continuous process of inflation, governments can
confiscate, secretly and unobserved, an important part of the
wealth of their citizens. By this method, they not only
confiscate, but they confiscate arbitrarily; and while the
process impoverishes many, it actually enriches some"
- John Maynard Keynes |
