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

To: GST who wrote (24039)	11/8/2009 5:11:17 PM
From: gregor_us	1 Recommendation Respond to of 71412

What's intriguing about financial crises with respect to the target currency, is that often there is a flip-switch type of phenomenon to both the currency's value and to hyperinflation. It's sort of like the old saying, about going broke: "at first slowly, and then all at once." So, there is risk of USD based dislocations up ahead, but I am unsure of how that plays out because the later phases of these messes appear to become very impulsive and psychological. The same structural forces that allowed Dollar-Land to become so heroically and deeply unsound are the same forces that are braking our fall now, to the downside. It's a shame really because without the Dollar Paradigm we would have never been allowed to reach this point. Many countries have a currency crisis and a Sudden Stop even before the situation gets this bad. In a perverse way, they are lucky. -g- I could see Americans thinking for years that the Dollar "has to rally" and that "gold is in a bubble." I favor the idea that we escape a USD crisis in nominal terms (against other forex) but get walloped in real terms. Again, although I nod to the deflationists in a congratulatory way, I also like to point out their bad habits and this entire conceit that "The dollar can't crash, because what's it going to crash against!?" is just too cute and disingenuous for me to stomach. It will be hard indeed to get the USD to "crash" against other forex. But USTreasuries can certainly crash, and the USD can crash also against chocolate, gasoline, silver, coffee, sugar, oil, beans, copper, and bespoke baby strollers from The Netherlands. watchingmachine.typepad.com G