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

To: DebtBomb who wrote (14851)	11/22/2008 10:25:44 AM
From: TheSlowLane	2 Recommendations Read Replies (2) \| Respond to of 71463

From what I understand, a lot of the demand for US Dollars recently has been driven by hedge funds selling off foreign investments to meet redemption demands. The proceeds for those sales are converted to USD and then repatriated to meet redemptions. Another source of demand has been the foreign institutions that loaded themselves up with US agency paper (Fannie/Freddie). They put on USD shorts as a hedge against all that paper they had bought. As the value of that paper diminishes or as they sell those positions down (or both), then the size of the hedges need to be reduced proportionately. That means covering the USD shorts, which drives demand for USD. This scenario is different than buying USD for fundamental reasons and once it has run its course, then the USD is likely to resume the trajectory described by Mr. Schiff.

To: DebtBomb who wrote (14851)	11/22/2008 10:29:04 AM
From: stockycd	4 Recommendations Respond to of 71463

How can you default on something that is in theoretical unlimited supply? The value of the currency doesn't change the number of dollars that is eventually paid back. Don't borrow, just print. The holder of debt (China) is a the disadvantage if we enter higher inflation. They get paid back the same number of dollars but they are worth much less than when they were issued. cd

To: DebtBomb who wrote (14851)	11/22/2008 10:48:10 AM
From: Real Man	1 Recommendation Read Replies (2) \| Respond to of 71463

It can keep rising like a rocket <G> Just kidding. GM is begging for help. We keep rewarding speculators and destroying the backbone of our economy. Gee. Dollar is ZERO bound. Liquidators, let's have fun... gmfactsandfiction.com The demise of the American auto industry won't really affect the American way of life. What happens to the U.S. auto industry matters on Main Street. From plants to parks. From dealerships to driveways. From gas stations to grocery stores. What happens in the automotive industry affects each and every one of us. In fact, the collapse of the U.S.-based auto industry wouldn't just impact the nearly 355,000 Americans directly employed by the Big Three. One out of every 10 people in America is employed in a service that is related to the U.S. auto industry. If a plant closes, so does its suppliers, the local stores, the hot dog vendors, and the local restaurants. The effect would be devastating in ways of which you never have thought: Nearly 3 million jobs would be lost in the first year alone – with another 2.5 million to follow over the next two years Personal income in the United States would drop by more than $150.7 billion in the first year The cost to local, state, and federal governments could reach $156.4 billion over three years in lost taxes, and unemployment and health care assistance Domestic automobile production would more than likely fall to zero – even by international producers, due to supplier bankruptcies The credit crisis that is affecting us all is wounding the U.S. auto industry in many different ways. Carmakers can’t get loans to restructure and to produce new advanced technology vehicles. Suppliers and dealers can’t get loans for routine business, and customers can’t get loans for new cars.

To: DebtBomb who wrote (14851)	11/22/2008 11:35:56 AM
From: Don Earl	1 Recommendation Respond to of 71463

RE: "The problem right now is the globe is dog-piling into dollars as their markets and currencies dive." Not exactly. The Fed has used something on the order of $1 trillion in currency swaps to prop up the USD. I've seen a fair amount of speculation that some of the investment instruments denominated in USDs are responsible, but I think that's more of a red herring along the lines of blaming everything on hedge funds. Some of those things may play a role in what's going on, but it's only part of the big picture. Sort of like calling treasuries a "flight to safety" or a "safe haven". Most brokerage accounts are set up so that cash balances are held in money markets, which are largely made up of treasuries. It's less that people are buying government debt, than it is they are dumping stocks and moving to cash. IMO, the bottom line is that if the balance of these trades were favorable to the USD, there would be no need for the Fed to intervene in such a big way.