Wednesday, March 23, 2011

Is this the endgame for the US dollar?

Is this the endgame for the US dollar?

The US dollar was once seen as a safe haven. But even amid the recent market turmoil, the dollar has declined and has now dropped through a key support level. How much further could it fall? And what might send it rallying higher? Dominic Frisby investigates.

Posted by damien @ 11:03 AM (1572 views)
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5 thoughts on “Is this the endgame for the US dollar?

  • general congreve says:

    But some credit has to go to the Fed for its performance of late. Ben Bernanke’s insanely inflationary, loose-monetary policies of artificially-low interest rates and quantitative easing (QE) have had the specific aim of devaluing the dollar. The goal is to devalue US debt, while creating a reassuring boom in asset prices. In that regard it has succeeded. Those who hold the notes have, via the clandestine erosion of inflation, paid the bill.

    Same applies in the UK, you lucky, lucky note holders!

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  • “The dollar is very important in the scheme of things” says Dominic. Its the reserve currency. But what will happen next? Will the next 5 years be like the last 12?

    If the Pound, Euro and Dollar continue this devaluation, will there come a time when grotty inner city flats reach prices of £1m each? (ie: a crash may not happen)

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  • general congreve says:

    @2 – Previous high/hyperinflations have shown that property in both nominal and real terms actually fall during such periods, because everyone needs money for essentials and has nothing left to bid up property prices. It’s all good.

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  • “everyone needs money for essentials” .

    This may be correct. For example, I know two market bric a brac dealers. Over the last 9 months, the trade in china, dinky toys and old £5 notes has dried up, to be replaced by people selling gold & silver. I’ve watched silve plate of all types cut up, along with gold jewellery from ex wives, old boyfriends etc., etc. All for the melting pot. The trade is really big, and possibly accounts for the fall-back in the silver & gold price early this year. Everywhere I go I see those “Gold bought here” signs.

    I’ve had an order in for nice numismatic bullion coins for a long while. If the Pound, Euro and Dollar stop their downward depreciating cycle, then Gold may become a bubble. Technically, the critics could turn out to be right. However, I see Fannie now has to sell $10bn a month of mortgage backed securities and the Northern Rock has followed suit with a much smaller target. This gets debt off government books into the institutions, once again – more QE soon. How else to bail out California, Portugal etc.

    The ConLib plans to get property prices up again are hidden in FTB support arrangements announced today. I think its a trap for the unwise, better to let prices drop 10% than make the FTBs borrow money.

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  • A Gold bubble is a myth, that requires a mania, rather Gold is retaining its historic value; it’s price has only been rising fast, because high (currency) inflation is causing all fiat currencies to rapidly become more and more worthless!

    The political class, the state, their employees, and dependants, (unproductive people) are just predators who currently fail to accept that their ratio to prey (productive people) has become unsustainable, from increase in their numbers, excessive predation by themselves and excessive allowed predation by banksters. A rising government debt is caused by an excess of predators over prey; inevitably the prey will have to be culled to permit the survival of both the predators and the prey, this cull is on far too small a scale, currently!

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