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Strategies & Market Trends : The coming US dollar crisis -- Ignore unavailable to you. Want to Upgrade?

To: Tommaso who wrote (1134)	9/26/2007 12:37:23 PM
From: Real Man	Read Replies (3) \| Respond to of 71454

Chronic inflation threatening to get ballistic (Hyperinflation a la Germany in the 20-s or Zimbabwe currently) will happen in the US if the World abandons the dollar peg and starts selling US dollar debt, while the Fed responds by monetarizing the bad debt.Given their current inclinations, I'd venture a guess that this will be the Fed's policy response. I would define such action, de-pegging and selling of USD assets by foreigners, as the dollar crisis. Thus, so far the dollar has lost a lot of value, but the dollar crisis has yet to occur. Nobody any longer knows what real inflation is in the US, since the BLS is producing fake numbers, but according to some statists, such as John Williams, who attempted to reverse all BLS CPI revisions (lower, of course), US is already in chronic inflation mode, defined as inflation above 10% per year. Oil=80 does not really go together with 2% BLS inflation. I'd guess it is somewhat below 10%, but way above current rates for treasuries of all maturities, probably running at 7-8%, which by itself makes the Fed's policy extremely accomodating. Such action certainly promotes more inflation. The only thing that can provide some relief from accelerating inflation is a recession and debt collapse, but the Fed would allow neither