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

To: gregor_us who wrote (24219)	11/13/2009 12:54:54 AM
From: benwood	1 Recommendation Read Replies (1) \| Respond to of 71463

Excellent post, Gregor... you covered a lot of ground there. My gut feeling is that the reserve currency bit will save our sorry asses and result in the gradual deflation of buying power (i.e. a few percent a year or perhaps even ten percent a year). The headline today underscores the relevance not only of that status, but that we still consume an enormous quantity of stuff and so other countries risk their own rising unemployment should our dollar fall too far, too quickly. Or worse -- global dislocations. I think the rock and hard place will be in either commodities shooting the moon (and the dollar dropping like a rock) or the Feds allowing the market to set interest rates and having an enormous hole blown in the budget (and the stock market). I'm thinking of taking all my long term gains before the end of November, because I think the risk is rising -- it's got to be rising -- for escalating taxes next year. The middle class has been looted; now it time to make them pay for it.

To: gregor_us who wrote (24219)	11/13/2009 10:13:52 AM
From: ggersh	Respond to of 71463

Yep, UST has always been the key that unlocks everything!

To: gregor_us who wrote (24219)	11/13/2009 10:49:59 AM
From: Real Man	1 Recommendation Read Replies (4) \| Respond to of 71463

The US will likely experience a tsunami in which the dollar will lose at least a couple of zeroes in purchasing power over time. The key reason is that US is no longer a capitalist society, it is a corporate welfare command economy, which results in great misallocation of capital (thus, we saw a lot of "bubbles"). In a way the eventual crisis has to be similar to the breakdown of the Soviet Union. There is no way out of this, except restructuring and the restoration of honest money. Unfortunately, we already had a lost decade, during which even more misallocation and more command economy happened. This is still rolling downward. Most likely eventual scenario is hyperinflation, then the return of the gold standard. IMHO. This is a very pessimistic scenario, but the command economy essentially robbed US of its industrial base. Essentially the build up to the current crisis started when US abandoned honest money and started to abuse the privilege of printing the reserve currency. My wild prediction stands - the world will be back to honest money, as there is always a way to abuse the privilege of being part of the basket of currencies, if the ratio in that basket is fixed. Right now we are seeing a bit of a fight among countries to be included in the basket - everyone wants money for nothing. At some point nobody will want to hold the bag. The downfall of the US started with the introduction of the first competitor for reserve currency, the Euro. At this point more competitors will be introduced. "By a continuous process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method, they not only confiscate, but they confiscate arbitrarily; and while the process impoverishes many, it actually enriches some" - John Maynard Keynes