The Dollar Is Weakening...

Well Mark, I really don't like the fear-mongering *MASSIVE HYPERINFLATION, DOLLAR WORTHLESS * because it's not going to happen... well, I sure hope it doesn't go down Weimar style! The first reason why the dollar is still so strong is mainly, from recent times, a 1970s OPEC protocol that states anywhere in the world, if a barrel of oil is to be bought or sold, it must be done in US dollars. Now, countries could choose not to follow this, but they would be at a loss since light sweet crude (and gold and silver) are denominated in US dollars.

Thus after this landmark protocol, it gave the US a license to print money because every government in the world had to buy dollars to buy oil. Thus, because of this demand for dollars (like demand for any other item) the fed printed billions trillions more than what the US economy is worth in order to feed the integral role of being a global currency. That's why we can have a national debt of $10 trilion now? or is it higher... without having our money go to the dumps because everyone depends on it. If any other country carried this much debt, their currency would already had at least 3 revisions by now.

However, the dollar and the yen are still seen as haven currencies. Remember the start of the banking crisis how the EUR was at $1.28 and the GBP was at $1.38 and silver was at $9? (It wasn't that long ago) That was because people still wanted a safe currency, which happens to be the dollar.

However, if OPEC ever goes back on that protocol and switch to a different currency (let's say the EUR) then all the central banks of the world would have to flush their vaults of all stockpiles of dollars and buy Euros. And if this happens, all the dollars would have to flock back to Manhattan and DC, and the Fed will not have enough EUR to pay for the USD (since I mean, the money supply is like 4x our economic strength) and will cause a total collapse of the dollar on the open market. And that would be the federal reserve's worst nightmare.

Now, why doesn't anyone do this yet? They all have T notes, T bonds and other government securities. If the world is planning to do this, then it would be a slow process that is easily seen since they would have to allow the notes to mature first (~5 to 10 years) and then (shockingly!) not buy any more. Plus, as America we still gotz da capabilities (militarily). If Iran (which is seriously showing interest in using the Euro and have the oil) ever decides to switch, oh lordy, I'm going to Switzerland.

Buy Canadian silver and gold coins.....
few weeks ago I suggested Can $ will go uppppppppp
HHB

I believe that this will be a major issue in the not too distant future. "Servicing" the U.S. national debt already amounts to 1/3 of the U.S. Federal budget (2008) and is growing at what seems to be an exponential rate. This will come to a head within 20 years and likely sooner. America must get a handle on deficit spending before it's too late (if it's not already).

As far as Hyper-Inflation, I don't foresee that happening unless we don't get a handle on the above mentioned topic. IMHO we'll see significant inflation begin late next year and continue at 4 to 6% for sometime. Worst case scenarios could put inflation at 8-9% and that's if we keep spending like we have lately, which I believe we won't after this year (if fiscal sanity prevails).

Anyway; that's still no where near Hyper-Inflation but 6% is bad and probably unavoidable for early in the next decade. It's safe to assume that everyday life will be much more expensive 5 years from now than it is today (and relative to the low inflation we've experienced of late). Don't panic but be cautious, use your skills and your instincts to get through what is going to be a tough few years ahead of us.

Prosperity will return but it will take several years to get out of the mess we've gotten ourselves into.

China, like Japan, has become so tied to the U.S. economy as a part of it's GNP that it can't abandon holding U.S. debt. Dumping this debt would destroy a portion of that investment as they would drive the value of what they hold down at the same time diminishing the market they so need. What does it tell you when the number one importer of Chinese product is Walmart.

Jim

The pound is worth a $1.60 today. First time in 7 months. I can recall last year when the pound was worth $2.

Hate to ask...
did you all buy canadian and or Australian dollars?
you would have made 10 % easy in week...
still time... as gold and silver will continue to rise another 15-20 % by late fall...
did you guys hear that one:?:

when Obama took office his people knew what had to be done, so they placed an order in Germany with the largest Printing press manufacturer in the world. Why? to print more $$$$$.
last week he got a call from the Germans suggesting the Govt"s check bounced, but they would take Gold coins instaed....

I have tried to get a bank approval DWN under for taking part in a permanent auction place... it is as hard as finding teeth in a henn and probably next to impossible. I live in canada.
though, I can move and work there without any problems and then it is easy.
AND, I was prepared to put 10K in an account as security. they said they would give me an account with the 10K making me interest, but nothing else...and they said something about taxes....grrrrrrrrr
hhb
forget it unless u live there
maybe I approached it wrong

What I do is pay a small premium at the local Wells Fargo and get physical notes in uncirculated condition. They're slightly more expensive but then that's a small price to pay for collector unc notes.