Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: carranza2 who wrote (34956)	2/3/2011 4:26:34 AM
From: roguedolphin	Respond to of 71475

USD OMG Richard Russell snippet Dow Theory Letters Feb 2, 2011 321gold.com February 1, 2011 -- Is the US's financial position hopeless? I've studied the US finances backwards and forwards, and as I see it the US's financial position most definitely is hopeless. The actual posted national debt of the US is $14.1 trillion. However, the US reports its finances on a cash basis while omitting its unfunded obligations in such items as Social Security, Medicare and Medicaid and various other entitlements. If the entitlements are included, the total national debt including unfunded obligations would be over $100 trillion. Wait, it gets worse. Entitlements, defense and interest on the national debt takes up 80% of the entire budget of the US. That leaves just 20% that can be sliced away if the US wants to actually cut into its deficits. So what's left to cut? Actually, nothing that's politically feasible. To make the picture even more grotesque, the first group of baby boomers is now reaching the retirement age of 65. As they leave the nation's work force, the problem of financing Social Security becomes more difficult if not impossible. So what in God's name is the answer to all this? How will the US's finances be handled? There are only two ways that I can come up with: The first is -- to default, just declare that the nation is dead broke and it can't meet its obligations. That would be tantamount to admitting that the US is less than a third-rate power, a dying banana republic. Unthinkable. The second way would be to devalue the currency to the point where obligatory dollar debts would be financed or paid off with dollars equal to pennies or nickels. It's now really a question of timing. With the national debt compounding at rising rates, the problem of financing the debt becomes ever-more pressing. For this reason, I believe the process of devaluing the dollar will have to be speeded up. From the government's standpoint, the deliberate devaluation strategy must be kept secret from the public. They must not be allowed to know that the currency they've worked so hard for, that the currency their savings are in, is to be crushed into a shadow of its former self. Ultimately, the awful truth must come out. At some point the government may be forced to be honest. The phrase will be three words that I coined many years ago: "Inflate or die." And, the government's answer will be, "You wouldn't want this nation to die, would you? We have no choice, but to pay off, or carry, the debts, with a currency that must be devalued down to ten cents on the dollar. You don't have to be a genius to read the chart below. This is the 1yr Dollar Index chart. First we see the long decline from June to November. Then a short rally, that was interrupted by a consolidation. Most recently, the Dollar Index dropped through the bottom of the consolidation "box." This chart is one day behind. Today the cash Dollar Index plunged again (OMG) to 76.99! At this point, the Dollar Index is oversold and probably overdue for some kind of a rally. Well, maybe.

To: carranza2 who wrote (34956)	2/3/2011 7:00:40 AM
From: Giordano Bruno	1 Recommendation Read Replies (1) \| Respond to of 71475

Jim Rogers on CNBC youtube.com

To: carranza2 who wrote (34956)	2/3/2011 10:39:12 AM
From: Real Man	2 Recommendations Read Replies (2) \| Respond to of 71475

I saw that. RR is a DOW theorist and I think he is dead wrong in his "people buy the DOW to short the dollar" thesis. Nobody buys DOW shares Xept Ben, who buys Spoos. DOW is a subset of that. -g- A bit of kidding there, but there is some truth to that. The true statement is "Banks buy risk because there is Ben put under all markets in a form of QE2". Stocks are "risk", short dollar (long higher yielding something) is "risk". One market, one bubble, if you can call spades spades. What the "people" buy no longer matters - they are busy paying off debt, not buying anything. People do buy gold! The system is also on a boundary of another disaster, QE2 acts like a duct tape. The reason is above - there is no legit volume.