Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: Real Man who wrote (10729)	8/27/2008 9:55:55 AM
From: GST	Respond to of 71456

<It's A bear market bottom> That is how I see it as well. I also see it as the beginning of a period of competitive devaluation -- an inherently unstable inflationary period for many currencies. Countries with strong current account surpluses fear currency appreciation will choke off their surplus. China has allowed the RMB to float up 25% against the dollar in the last few years -- now I think they want to slow the rate of ascent. Japan has always feared currency appreciation for the same reason. I don't see the US current account deficit shrinking to levels where it is not a factor pushing the dollar down until we see a much lower dollar. Remember, the current account deficit is NOT merely the trade deficit. We have to service trillions of dollars of existing debt and federal deficits pile on hundreds of billions more each year. That is not going to turn around in a recession or period of stagflation. The long term terminus for the dollar is likely to be far lower than where we are today because of our debt position relative to our savings rate -- in other words, it is a function of our absolute dependence on inflows of foreign capital.