Asbytec

Three Reasons Why the Dollar's Not Yet Done

Another reason the euro will not be the currency of choice has to do with demographics. The population is aging and this will lead to less economic value for the euro.

If I understand this correctly, we are in a financial crisis of cosmological proportions. The Fed is injecting liquidity, and I applaud them for their 'soft landing' approach. However, the debt money will disappear, or is disappearing, faster than the Fed can replace it.

We might just find ourselves at a level of money supply equivalent to Fed power money and far, far below (on the order of 70% or more) of our current money in existence. Add to that, the reduced global liquidity (about 10%) generated by the yen carry trade, and one can see global liquidity is in real trouble.

So, if we enter a depression, the dollars remaining in existence will be highly valued, and the cycle of debt money will begin anew. That is, if we remain on the fractional banking system...which we probably will do.

However, the dollar will certainly suffer in the process of recovering. "No nation has ever devalued its way into prosperity."

All fiat currencies fail, and all currencies are fiat. Everyone is inflating their currency and we, the middle class, are losing our wealth. I pray we will establish a currency based on value, not debt, as a result of this crisis. Ah, but I dare not dream to see it in my life time.