Monday, July 1, 2013

Manufactured Crisis or living beyond their means

US Dollar Will Collapse in 2013

"Black hole of debt". "Tax breaks for Obama's friends, austerity for others". US now "owns" 50% of mortgages. Time to cut the defence budget? (Maybe if they stopped spying on Europe taxes wouldn't keep rising). So, as America sneezes, we all get a cold!

Posted by alan @ 06:36 PM (2726 views)
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26 thoughts on “Manufactured Crisis or living beyond their means

  • US Govt bond values may collapse, but higher interest rates could send cash into USD seeing yields. I think we will see USD strengthen for a couple of years.

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  • but higher interest rates could send cash into USD seeing yields

    That’s one great big ‘but’.

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  • HP Watcher, present bond holders could be wiped out, but new ones may well flood in seeking yields, particularly if US rates go up and, there is crisis in Europe. You could see capital fleeing Europe into USA. That happened during the World Wars.

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  • Against ????

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  • Huh?

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  • Hi Techieman,
    When Ron Paul was asked specifically ~ he said Gold. He said the printing presses must keep rolling. The current gold drop (he said) was temporary.

    My observation is that I notice more bi lateral deals which will reduce the US dollar’s hold as a reserve currency. Whether this collapse will roll out in 2013 or not, I don’t know. The Snowdon debacle certainly hasn’t increased the popularity of the USA. But there is a counter arguement that the USA can go on for a lot longer with troops in 140 odd countries and the ability to spy on every PC under the sun…..

    Personally, I put my money on lots more money printing in the US (and some over here from Carney).

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  • I think Ron Paul is right, in the long term, gold is certainly going to $10,000, but to get there it has to re-test some lows, which could damage it technically for up to a decade or more. My issue with the Austrian Economists, is that they look at economics with a glacial view. They are right in terms of liberty and public policy, but their followers can end up out of pocket by following the principles dogmatically.

    Fact is, if the dollar strengthens from higher interest rates, that gold will fall, as it is.

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  • True, BUT I don’t see interest rates rising though.

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  • HPWatcher, globally, rates have been rising since 2011. Slowly, but steadily. Rates on US bonds ARE rising right now, and we had the recent blips with rates going up in Europe. The powers that be are desperately trying to keep rates down, but they seem powerless against the overall trend. Central banks can do what they want, rates on Greek Bonds went to the sky even with Euro rates down near zero. What is at risk here is a disconnect, where Central Banks become irrelevant due to their stupidity.

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  • HPWatcher, globally, rates have been rising since 2011. Slowly, but steadily. Rates on US bonds ARE rising right now, and we had the recent blips with rates going up in Europe. The powers that be are desperately trying to keep rates down, but they seem powerless against the overall trend. Central banks can do what they want, rates on Greek Bonds went to the sky even with Euro rates down near zero. What is at risk here is a disconnect, where Central Banks become irrelevant due to their stupidity.

    Yes, but the issue is it will be more expensive for governments to service their debt – so they will instruct central banks to keep the IR at 0% or near 0%. Of course, the fun and games will really start when governments start to print to service the debt – and I don’t think that’s too far off; of course, I am not saying that won’t happen in tandem with rises in IR rates when a recovery seems ”bedded in”. At the moment, I am not sure that TPTB can risk raising interest rates, and the economies of the world are generally so weak.

    But hey, we don’t have to argue about it – we will probably get some kind of indication either way in September. Although, tapering this year could well mean a big climb down next year.

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  • Hi Alan, I’ve watched the video and only really Max talks about the dollar collapse. In the first instance i also assume he means gold. Funnily enough ive liquidated gold longs this morning (against the dollar). I am actually looking to re-buy after a pull back IF we get one. IF the gold then rockets ($100+) everyone will be wanting to get back on the train again. However i would advise caution.

    Im actually a dollar bull (and have been for quite some time) as i see it as the best of a bad bunch. Im interested to see what Mr C does at the BOE but i think he either wont rush or he will take a ballsy step, looking forward to his comments in the next inflation report (August).

    There is a clue “Last week, Mark Carney, the incoming Governor of the Bank of England, suggested there might be a role for the Bank in boosting the economy to provide some form of forward guidance about what it’s going to do, and also that there might be a role for the
    asset purchase facility to buy assets other than government bonds.” (Q to Merv in BoE Feb inflation report press conference).

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  • “they will instruct central banks to keep the IR at 0% or near 0%.” – they dont control (long end) bond rates. If the market thought they did then why would rates have gone up against a background of “QE unlimited” (US)? Doesnt the fact that rates have increased despite that provide ample proof?

    Yes you can say that the market has reacted to the fed saying they will reduce the QE when the economy recovers (stating the obvious) but the 30 year bond topped (rates bottomed) long before that. The big moves are the only ones that wake people up who then need to blame it on some news. The trend was already established.

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  • they dont control (long end) bond rates. If the market thought they did then why would rates have gone up against a background of “QE unlimited” (US)? Doesnt the fact that rates have increased despite that provide ample proof?

    I’m not disputing that. I think the FED need to look tough, and talk tough on this.

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  • Michael Snyder gives 36 reasons for economic collapse.
    http://theeconomiccollapseblog.com/archives/36-hard-questions-about-the-u-s-economy-that-the-mainstream-media-should-be-asking

    All the questions are linked to data. Just to show even handedness regarding the dollar’s backing:

    1. The US has nuclear capability like no other empire.
    2. It has an “empire” of about 100 countries who will do anything and support anything they are told. A call from the White House is enough to change most president’s minds on issues of truth, principle and honesty (like Ecuador).
    3. The combination of America’s shodow banking and military presence is unprecedented (the UK had an empire, once).
    4. Technologically, it holds superior patents, worldwide, like GM foods. They trawl European industries’ phone and data lines to get them.
    5. They can lean on countries to buy their paper bonds.

    Sounds pretty unstoppable to me….. But they haven’t got a plan to end QE or sort out their debts. Money is leaving the US for assets elsewhere in the world which are safer.

    That’s why the dollar will race to the bottom with Japan’s currency. That’s why the US need to crush “real” gold with “paper gold” to destroy it’s credibility as a currency.

    The whole thing could fall over anytime as the US overplays it’s clumsy hand.

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  • It will be v. interesting to see how the US deals with the debt mountain – they have never managed to deal with it in the past – it just keeps on going up and up.

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  • “That’s why the dollar will race to the bottom with Japan’s currency. That’s why the US need to crush “real” gold with “paper gold” to destroy it’s credibility as a currency.”

    Alan are they your conclusions or someone elses?

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  • Whilst it may be what you wall want to hear, and much as we all hate bias in the BBC, you have recognise that its Press TV saying this.

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  • Hi Techieman,

    They are other people’s conclusions. But I think they are reasonably based. I guess my conclusions are a reflection of how I see the world going forward: politics, economics, etc.

    Japan’s currency and Abenomics is widely discussed in the mainstream media. I always take the Alex Jones stuff with a pinch of salt. He is an entertaining showman, but makes points that I don’t see the mainstream press making (as with Max Kaiser).

    However, back to serious debasement of currencies. Do you feel that this is not happening, and will not continue to happen?

    BTW, Thanks for taking the time to respond.

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  • …and in addition, looking at my post at (14), I should have used the words dent and bruise instead of “crush” and “destroy”. The words in (14) are a little too emotive on reflection.

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  • Dollar will collapse, but the issue is, what will happen in your immediate lifespan?

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  • It’s not just the dollar that’s in trouble. From the Telegraph:
    http://www.telegraph.co.uk/finance/business-news-markets-live/10154078/Business-news-and-markets-live.html

    Economist Vicky Pryce gave evidence to House of Lords committee on eurozone crisis today, saying the ECB will have to “intervene massively”. Does this mean the Euro is joining in the fun?

    She said: “At least Draghi realises there is an issue. He lowered interest rates, raises the issue of possible intervention, talks about increasing lending to SMEs….. If there’s anything to worry about in Europe it’s deflation. There is no risk, there is a huge output gap there that could be filled. It would be simple to stimuilate things by monetary expansion”.

    She seems to know what she’s talking about when it comes to grand strategy – pity about those speeding points 🙁

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  • Pound is looking very weak today against USD. If it drops much further there could be a complete Rout, concurrent with the new Governor coming into power.

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  • Alan I am kinda with Libertas on this. I believe the $ will likely eventually collapse but am actually more bearish on the other Fiats. So when the $ collapses or the £ or the EUR (shouldnt they have a symbol too?) I will hopefully be in it. I just dont buy this you wake up one morning and the $ is worth Zero and the night before it was worth alot.

    I suppose im saying these things happen relatively gradually and become a crescendo.

    I think you have illustrated the point – there are always two sides to every market position, and in general the media points to the one that fits the market move. Of course that doesnt mean that there arent game changing events, its just they are few and far between. Funnily enough as i type this the Euro has just gone below 13005 (alert on my mobile), so i need to take some profits on some of that short Euro position around here.

    If you are interested in the kind of moves i would say take a look at this: [skip the iintro] : http://marketvisiontv.com/

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  • I think the US is going to have to work a lot harder then to reduce the strength in the dollar – well, if they want an ‘export led recovery’.

    i don’t see a collapse in the dollar anytime soon, though I am – in general – in sympathy with Max, I do however see a lot of inflation coming if there is any recovery.

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  • 25. This comment has been removed as it was found to be in breach of our Blog Policies.

    Was that you techie?

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  • Not guilty ! Well not of that at least. Was wondering myself.

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