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The $64 Trillion Question: What's the Dollar Really Worth?

The only thing that can save us is the mercy of God.

The $64 Trillion Question: What's the Dollar Really Worth?

I couldn't agree with you more, paultaut.

My take is, since folks in Asia are bigger savers, and as their economy expands, they will want a lifestyle more like ours' in the US and Europe. I think there will be more intra region trade in Asia. These countries will divest from US dollar in the long term. I just doesn't make sense to hold on to a perpetually depreciating currency.

Also I am sure they are keenly aware that the US has an increasing aging population, just like Europe and Japan. Therefore consumption will be shifting, and a net divestment in the stock market will occur. Their net investment strategy will be adjusted downward accordingly.

I believe the rest of the world will be increasingly reluctant to finance our trade deficit after seeing our gross mismanagement in the financial sector, irresponsible government bailouts, and a general population of net spenders instead of savers/investors.

As a nation we had achieve much, and rightfully we should be proud of it. However, over the years we had been prideful in our ways. Look at the government, we think we can solve the financial fallout by manipulating the market through artificially holding interest rates and injecting liquidity into the economy (i.e. encouraging spending). Our energy policy is to send our troops (children) to middle east to 'secure' oil there. We think the rest of the world should [rightfully] finance our lifestyle, because if they don't they will not have jobs - how laughable!

You know the age old saying:

"Pride comes before a fall"

I think this fall is coming, and it will be a hard one.

SOLUTION:
1. Smaller government, lower taxes
2. Get rid of the Federal Reserve
3. Start saving more

The $64 Trillion Question: What's the Dollar Really Worth?

Let's play this out if interest rate is cut to say, 1.75%.

If I am a major holder of US$, I would probably want to seek out higher returns, or buy something of returning value with my depreciating dollars. Better yet, store their wealth in precious metals or assets in high demand like oil or within the energy value chain.

Who are the major holders of US$?
- Saudis
- China
- India
- Japan
- Singapore
- EU

I think we will see a lot of these dollars coming back to America - HYPERINFLATION!!!