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

To: Tommaso who wrote (15985)	1/3/2009 12:44:48 AM
From: axial	Read Replies (1) \| Respond to of 71463

As we've seen, some are predicting the USD will retain its strength. Surprise, so far that's been correct. Most people (me included) believe it won't last. But it appears Bernanke's bet is that a global economic crash can be averted long enough to restore functionality, at which time many currently-troubled assets can be sold off. True, at greatly devalued prices. So far, there hasn't been a run on the dollar. It appears that other global players recognize that's not in their self-interest. Meanwhile, governments are end-running CBs, to restore credit, while underwriting commerce and industry with a taxpayer-signed blank check for assets whose value is uncertain, right now. Bernanke has acknowledged Friedman's contributions, and Friedman was clear: the effects of all that injected money will be inflationary. Bernanke knows it. Presumably when inflation begins to bite, interest rates will be jacked up and anti-inflationary policy will rule again - probably resulting in stagflation. Will it work? Dunno. Will it solve the problems inherent with fiat money? No. Will it make anything "better"? No. It may buy time, and avoid a global meltdown. The alternative? Let 'er all crash and burn. Is that what the world wanted: crash and burn? It appears Bernanke has the cautious support of global USD holders. Nobody's saying he was right, only that he picked the lesser evil. Jim