Will The Dollar Collapse?

Will The Dollar Collapse?
(posted with permission from http://sane-ramblings.blogspot.com/2009/06/will-dollar-collapse.html )

People are understandably skeptical of my prediction in: "Your Money Will Become Worthless," (http://sane-ramblings.blogspot.com/2009/06/your-money-will-become-worthless.html ) of the coming collapse of the dollar, just as they were skeptical in 2007 of my prediction of a financial crisis.

Here are the two warning signs to watch:

1) Rising interest rates. The Fed is forcing down interest rates. But they will fail and higher interest rates will hit housing and consumer, business, government and other financings hard. America's creditors will also demand ever higher interest rates to keep financing America's staggering and fast growing debt.


2) Inflation. This will follow as the cost of money rises and America's creditors become more fearful and charge more for their products and for their money as they get paid in ever cheapening dollars. The cost of everything from gas to groceries will skyrocket as everyone tries to stay ahead of inflation.


Conclusion: People always think a currency collapse can't happen to them until it does. And sadly it will happen to America. Please take care.


Dick

but I think the jury is still out on inflation. If the stimulus-by-printing-press gambit succeeds, the expansion is real productivity will counteract inflation pretty strongly. If that fails to occur, then I think our dollar is headed for some serious trouble.

but so far that hasn't happened.

The dollar will collapse. The signs are out there.

The big one? Gold and the Dow are usually inverted. When the Dow goes up, Gold goes down...been that way pretty much since the 30's.
Look at Gold and the Dow. Both are going up.

That can only tell you one thing. The money supply has been hyper-inflated.

Did you see this graph?
http://sane-ramblings.blogspot.com/2009/06/your-money-will-become-worthless.html

You can't eat it, and its industrial applications are pretty limited (my response to people who complain about fiat currency is "what do you think gold is?").

Gold is a store of value everywhere - you can get any currency in exchange for gold.

Gold is a store of value everywhere

Like any other currency, it represents (not "stores") as much capital as the market is willing to exchange for it. Gold is not valuable in and of itself except for a very limited set of applications.

We've agreed it's had value since it was discovered.

That's why it's a standard of value.

The only thing propping up the dollar now are the loans from China are made to keep their immense stockpile of them usable. However, China has been slowly divesting itself of dollars by buying SDRs, oil contracts, mineral rights, and just plain property, all over the world. China has also warned that they will begin diversifying into other currencies.

Meanwhile, the politicians, economists, and Wall Street Wizards are telling us to be happy while they prop up the banks with our money and then tell us to spend more.

We have a winner.

Great post!

...at least not for a while. Right now, virtually every industrialized nation has a stake in making sure that dollar doesn't collapse. If the dollar goes, they go with it. So self-preservation will keep the dollar afloat for a good long while.

"When will the dollar collapse?"

destroy the value of their own foreign assets.

It is coming, though.