Lilguy

U.S. Debt Default, Dollar Collapse Altogether Likely

The author makes some important and cogent points although, in the end, I have to disagree with him on the collapse of the US dollar and/or default.

I guess the key to my thinking this is that I can't find a reasonable substitute for the dollar in the world's finance or trade. Depending on your viewpoint, either the Euro or Chinese Yuan would be the likely substitutes for the dollar in the post-dollar day. However, I think that all the issues facing the dollar also face the Euro and potential currencies from its constituent countries. And, despite its reserves (in US dollars!), the Chinese Yuan does not have the strength to finance the world now or in the foreseeable future.

And, no, gold is not it. Indeed, if gold were to look like a substitute for a devalued dollar, you can bet the USG (& other govts.) would step in and seize it at some ridiculously low price. Moreover, given the size and speed of global finance & trade, I don't see how it literally could serve the purpose.

Still, I think long term the value of the dollar will slowly sink, especially against Asian currencies. But that will be after the current depression with the ensuing US hyperinflation. Not looking forward to it, but I am trying to think how to prepare.