USD Clamor; The USD won’t go quietly

Commodity News Center ^ | 9/9/09 | Christopher Laird

[h20skier66]

As gold tries to break and hold $1000 it brings up the larger question of how long the USD has to last. At the very least, after the markets digest the debate over deflation which is USD bullish, the question becomes: how long can the USD hold together before it falls in value drastically.

Big drumbeat out there

I am sure that you know about China vigorously complaining about the abuse of the USD, most loudly complaining about the Fed's quantitative easing (buying any and all bad assets from banks and putting them on their balance sheet - called monetization, which is printing the money to replace the losses). The Fed had to back off this Summer from that plan and significantly reduce those policies, said in large part due to China's vigorous complaints.

No, we cannot

Or, in other words, the Fed is finding it cannot just print its way out of its problems, it cannot just ‘drop money from helicopters', Bernanke does not have the latitude he thought he would have when he made that infamous statement, the bond markets won't tolerate that without crashing the USD and skyrocketing interest rates. Skyrocketing interest rates would totally stop any remaining credit growth, which will strangle the remaining life out of the economy.

If you agree with that, then the prognosis for the US and Western economies will be a second round of credit deflation, and must result in much lower stock markets.

[nmh]

We are debasing our money with all this idiotic spending.

Our money is worth less each day.