- Essentially, for the first time in history, the debtor is going to try and dictate the terms of resolution to the lender.
Guess how that one is going to turn out?
If everyone else in the world no longer wants dollars, given economies everywhere heading rapidly into the dumpster, what makes you think Americans will want them?
My point on this scenario is, as you say, if it comes to pass, the result of all this governmental action to strait-lace the markets according to their dictates will result in a destruction of the currency itself. That is my point.
The dollar is at a point where it has very little lassitude for forgiving the abuse it has received over the past 6+ decades. The dollar has, over this span of time, lost 91% of it's 1933 value.
If you inflate the money during a deflationary cycle, the net effect will be to knock the stuffing out what will become essentially worthless specie.
So you have a scenario where (1) the value of the money isn't there, and that's compounded by (2) people not spending it because they don't believe in it. (Never mind that many won't have it in the first place.) Given that, where's the impetus to fire up the engines of inflation?
As another poster stated, the printing presses are running full time today, but that is having no effect, as banks are simply putting the stuff on their books. If trillions are immediately repatriated, where will that money go? Further, during the process of "repatriation", how will those debts be settled to the satisfaction of those trying to liquidate their positions vis a vis Treasury obligations?
If that type of dumping occurs, you will first see the country declare bankruptcy (did you know the US of A is a private corporation? That little bit of legerdemain occurred during Reagan's first term).
Essentially, for the first time in history, the debtor is going to try and dictate the terms of resolution to the lender.
Guess how that one is going to turn out?
CA....
But what are we going to do after all those nice foreigners who were financing our profligate consumerism decide to get out, panic selling Treasuries and exchanging out of dollars.
The value of Treasuries and dollars will be driven downward. Those of us, such as myself, who have been in T-bills and cash, smiling as all around us lost value, will get our turn at the wailng wall if we don't reallocate. Treasuries will reverse their 25 years of fairly steadily increasing value, with their imputed interest rates starting to climb again. The cost of imported goods and energy will go up.
We are in a Treasury and Dollar bubble right now, as of this last summer. That bubble won't last as long as the bubble built on unsound real estate mortgage debt. It too will pass, likely with some financial violence.
After a point, the current rulers of China, Russia and various OPEC countries, when there is sufficient unrest within their nations that threatens their rule, will cease to be friends of the dollar. Once one of them starts to head for the exits, the others, even Japan, must rush for the exits as well, or face near certain financial ruin and government collapse.
In my view (not one shared by many others) the essential value of the dollar is in the tax collections of the IRS. It is these taxes which pay the interest on the Treasuries which can be reliable converted to and from dollars.
So long as the IRS remains solidly in business, Treasury interest will be paid and the dollar will have some (likely fading) value.
Guess how that one is going to turn out?