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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: Haim R. Branisteanu who wrote (16540)	7/15/2004 10:20:28 AM
From: BEEF JERKEY	Read Replies (1) \| Respond to of 110194

I agree when you say the US dollar has a certain "cachet" in the minds of many people around the world. That the US is admired, if even reluctantly in some circumstances, accounts for some of the store of value of the US buck. The trouble is that, Greenspasm et. all - Federal government etc., have really cashed in on the US's role as the world's currency and may have already ruined it as a store of value. No other nation could get away with running such an outrageous trade deficit. This deficit would have been impossible under the world's previous "gold based" system. That the US has been able, for years, to simply print and exchange paper dollars for hard goods of value - eg. oil, high quality cars and widgets from China, has resulted in the rest of the world simply now holding too many dollars. Asia holds trillions. The reluctance of the Asians to spend their dollars in fear of having their own currency rise is part of the "weak glue" holding the current system together. Imagine if the Asians tried to exchange their dollars for things of value over a short period of time. This current system is simply unsustainable. The Asians get nothing for their hard goods if they cannot spend their dollars. Simply put the US has abused the dollars role in the world. It think that the US dollar's relative value is toast if even only based on the concept that the market value of something there is too much of goes down. There are other issues too - the loss in the US of it's manufacturing base doesn't help. The value of the dollar is significant to national security too. What’s gonna happen when the US government can't afford buy oil to run it's military? It may be forced unilaterally invade countries rich in oil.