Friday, March 20, 2009

Say Goodbye to the Dollar

Here comes the peak of the currency bubble.

On Wednesday, our government did something crazy. The Federal Reserve Bank (the Fed) announced it would buy about $1 trillion in treasury bonds. But the Fed has no assets. It has no inherent value. Which means it is printing the money to do this. Basically, the dollar is now monopoly money.

Coupled with the facts that the CBO has announced that the deficit looks a lot worse than it did a little while ago (to the tune of $1 trillion), China is concerned about the US debt is not a good investment and the G20 is saying that the dollar is no longer a good reserve currency, it all points to a bad future for the dollar.

What's happening is that Bernanke is desperately fighting deflation by pumping tons of cash into the system. The problem is that when the underlying deflationary trend bottoms out, and inflation starts up again, we run the serious risk of hyperinflation. At that point, we'll have to suck tons of money back out of the economy, interest rates will go up, and investment will slow down. We'll run the real risk of a double-dip recession or even a full-on depression (with inflation, whee!), all because we can't take our medicine and deal with the real pain we need to absorb to get past the housing collapse.

Glenn Beck lays it out pretty clearly in this video:

But don't take my word for it, or Glenn's. Do your research, and get out of anything that's not of real intrinsic value.


Andrew said...

This is really frightening, actually. I wish I had the money for some acreage and the time and resource to learn a little farming.

Big Jay said...

Yeah, but we heard about that 'awful' gaffe by the president. "Special Olympics". Get a life everybody and throw the outrage at the stuff that matters.

And by 'everybody', I mean the billions of people who don't contribute to or read this blog.

Andrew said...

Wait, there are people in this world who don't read or contribute to this blog?

Yeah, I really don't like fake controversy and outrage.

I didn't go for it when they tried to make hay with Mr. Bush's misstatements and rhetorical errors, and I won't accept it with Mr. Obama's, either.

Nobody's perfect.

If you do hound someone about every misstatement, then you end up with someone who can hardly speak at all in front of the media.

Angela said...

One possible bright spot on this issue: Most other members of the G7, and possibly the G20 will have to do something similar in the next few months. If all the big players do it at the same time, the dollar is still final money