patio

Key Reasons to Be a Dollar Bull

"The US -is hiding the true extent of its liabilities which total near 50 trillion (public and private) -which is close to 500 times GDP. It has been widely acknowledged that these financial services added to the GDP and now that the bubble has burst -we do see a net decrease in GDP -probably from 14 trillion to around 10 trillion.

So we have 500 times GDP/debt ratio -and no end in site for atleast two years where we will spend atleast an additional two trillion more , the need for the fed to buy treasuries as foreign investors wll be reluctant, a spiraling upward of deficits -to reduce or mitigate the building anger of millions of americans who have lost a substantial amount of wealth, and the continual financing of incompetent US states, corporations and federal government agencies."

You see, again, this is all known, the US isn't hiding anything that hasn't been discussed ad nauseum in tons of blogs and in published articles.
Every thing you said is old news.


On Feb 07 10:44 AM iyamwutiam wrote:

> The fact that the US does not have a dictatorship and Congress will
> not endorse ridiculous sums of money is patently false from the facts.
> The only thing that is saving the US dollar is that it is a reserve
> currency. Case in point -Russia- having to pay only 110 billion in
> debts due is being rapidly devalued via the ruble. If they were a
> reserve currency such a paltry sum is meaningless.
>
> The US -is hiding the true extent of its liabilities which total
> near 50 trillion (public and private) -which is close to 500 times
> GDP. It has been widely acknowledged that these financial services
> added to the GDP and now that the bubble has burst -we do see a net
> decrease in GDP -probably from 14 trillion to around 10 trillion.
>
>
> So we have 500 times GDP/debt ratio -and no end in site for atleast
> two years where we will spend atleast an additional two trillion
> more , the need for the fed to buy treasuries as foreign investors
> wll be reluctant, a spiraling upward of deficits -to reduce or mitigate
> the building anger of millions of americans who have lost a substantial
> amount of wealth, and the continual financing of incompetent US states,
> corporations and federal government agencies.
>
> One may look at the short term context of global panic and see that
> it is 'good' for the dollar. However, in the long term -3-5 years
> - it seems that it would be implausible for people notto lookat the
> rising deficit, prolonged recession etc in any other view than one
> with trepidation. Perhaps the US will survive on carry trade as did
> Japan ?

Key Reasons to Be a Dollar Bull

Those are reasonable questions, but none of problems noted are unknown. The world has "priced in "current US debt and intentions going forward of increasing that debt. And yet, the T-Bill has not crashed, the dollar has strengthed, as Bruce pointed out. All common metrics point to deflation for some time, but the inflationista's only argument is Fed printing.
But the worlds biggest players are not shunning the dollar, quite the opposite. Is the argument that China, Japan, and Saudis going to wake up some Sunday morning, and be suddenly alerted, "Gosh, the US is really quite the debtor nation, what were we thinking".
I don't have a crystal ball. IMO this thing is unknowable, its an unprecedented crisis. But I do think anyone who references Zimbabwe has zero creibility. Yes, we have issues, big ones. But the US is still the only true superpower, militarily, politically, and yes even financially.
The entire global commerce structure goes through the US, every country would be severly affected by our demise.





On Feb 06 09:13 AM SW Richmond wrote:

> Thanks for volunteering to be the dollar bull. I am searching (so
> far in vain) for answers to some questions; maybe you could help
> me out? I'm not bashing your article or your premise, I genuinely
> want to know how you think these issues can be resolved.
>
> Here's a cut-and-paste of a previous reply to another SA dollar-bull
> article. I would truly appreciate your thoughts.
>
> "Maybe I can get this author to explain why they will stop trying
> to reflate? In the face of vastly reduced tax revenues, many US states
> are beginning to flirt with BK. States cannot print. The US is similarly
> faced with both mounting debt (and the mounting debt service to go
> along with it) and reduced tax revenues.
>
> Someone please offer me a rational explanation as to why this situation
> will be allowed to continue, why at some point the central banks
> and treasuries of the world will say 'it's not working, so screw
> it' and how it will be resolved in a deflationary environment.<br/>...
>
> What will happen to the debt?
>
> How will it be paid?
>
> If it is not paid, what happens to currencies in national defaults?
>
>
> If you believe there will be a deflationary spiral and still no default,
> how will the defaults be avoided? Where will money come from to service
> debt?"