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

To: ggersh who wrote (15959)	1/2/2009 4:24:59 PM
From: Elroy Jetson	Read Replies (1) \| Respond to of 71403

U.S government debt is very little different from U.S. Dollars. Both are an obligation of the United States. While in theory the debt cannot be spent, it can be readily converted for Dollars which can be spent. So there is little real difference whether external obligations of the U.S. are held as U.S. Dollars or U.S. bonds, or switched back or forth. So I'm not sure what you mean when you ask if the Dollar will go back to trading on fundamentals. But U.S. government debt or Dollars are quite different to private Dollar obligations. U.S. Dollar debt held by foreigners is equal to roughly one year's income of the U.S. but 2/3 of this is private debt, some of which is becoming, or is already worthless. It is only reasonable to have expected that the holders of much of this private debt would tend to dump this debt if they could, in exchange for government debt or U.S. Dollars. If you consider a government printing additional money to be analogous to counterfeit, private debt creation is equally the same. When a credit bubble contracts, trillions of counterfeit currency goes to money heaven with predictable results on the value of currency. Our current credit bubble merely lasted so long that many have forgotten what happens when it collapses. .