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

To: Paul Kern who wrote (1136)	9/26/2007 12:48:21 PM
From: Real Man	Read Replies (1) \| Respond to of 71454

If the World CBs are an organized crowd, then yes. What about all the huge losses they have from holding their reserves in dollars? At some point, the action of some CBs (and, definitely, most investors) will be YOU do it, while I get the hell out of USD assets -g- We are seeing some of that now, and we'll see more of that as the dollar drops. 80 was an important phychological level, but the shift in psychology of FCBs has not happened yet, it's just happening gradually. Most likely the dollar crisis will arrive at the most inconvenient time, i.e., when the US economy will slide into recession and the Fed will need to slash the rates. The dollar will drop hard, and the Fed will be left with a choice of a hyperinflation or a depression. I don't think either outcome is cast in stone, it's a choice made by the US government and the Fed. Some governments choose depression (the currency crisis), some hyperinflation. Hyperinflation is much worse. I think that given their policy actions (suppression of inflation statistics and acting easy at the first sign of trouble), the Fed will choose hyperinflation, but I'm not a Fed member. We'll need a clean-up guy like Volcker to head the Fed.