chiker

The Destruction of the Dollar: It's Nearly Inevitable

"As I’ve said so many times before, the Chinese, the Japanese, the UK, and the Saudis are not stupid. Neither are most other lenders of note."

If not stupid they ain't brilliant either.
If the dollar is destroyed China is not genius.
The eldest Medici on his deathbed offered advice - one of which was don't make sovereign loans. The Chinese in fixing the yuan do just that when they exchange trade dollars / own our Treasuries. WIth their Fix, they are complicit.

If the dollar is destroyed how do other fiat currencies fair - Sterling for example? Does England, our divorced parent, manufacture much or have any account surplus to protect her Sterling? How far are the Saud's from Dubai? Do they have an answer for Twilight in the Desert? Do they have diverse cultural strength or an enviable Constitution? The Japanese had a Lost Decade - lets add And Counting. How does their Debt / GDP compare?

How $$ progresses no one knows, but there is no fix or constructive way out offered in authors text - just a trade idea or two. On that note...

To be long any 2x ETF including TBT is a disaster - returns are dependent on the price path of the reference security - which is unpredictable. Therefore you can be correct on rate move but invested in the wrong vehicle. Check FXI vs FXP jan 08 thru jan 09 says it all. Or sum FAS and FAZ on their ipo, reverse split adjust them(that should tell you something in and of itself), and sum FAS and FAZ today.
Torched.

Consumer-Driven Deflation? Not Even Close

exactly. this is what is behind paulson's gold play - he views the monetary base growth vs money supply decline divergence with skepticism. he latter hasnt spiked like the former because? the 'base has not been put to loans...yet...the table is set.

for the author: you laid out doom and gloom from fiat currency which last i checked is global issue...so what are other solutions?


On Dec 01 06:39 PM skankinkid33 wrote:

> No, Bernanke cannot double the monetary base without the eventual
> effect of prices skyrocketing. The doubling of the monetary base
> corresponds to money the Fed created out of thin air, which it used
> to buy the worthless assets the banks had. That money never left
> the Fed, it is being held on deposit by the banks at the Federal
> Reserve. Once that money enters the economy via fractional reserve
> banking, the money multiplier will take effect and the money supply
> will skyrocket, so will prices.

The Unsustainable Lie of Inflation

to be clear the graph is the monetary base not money supply. the recent conundrum has been a decline in money supply measures versus the vertical move in the 'base. this probably is temporary, the money supply is just starting to increase, and the 'base will be tricky to reduce but it will - so there will be convergence.

Fiat Money and a Profligate Congress: A Bad Combination

saw you comment under forsythe/barrons..i hadnt seen your grants comment before i posted. Grant spent many issues laying out the history and decline of the Gold Standard...and probably is one of the few people on the planet that can teach balance-of-payments control(or lack of), where special-drawing-rights failed, the French/Roueff's understanding from the 60's etcetera. Most importantly he can really question what a dollar, or any fiat currency is worth. I used James Fallows books on China and found them very helpful to complete qualitatively, the puzzle of China-USA economics. good luck thank you