Watching U.S. Dollar: Will it Collapse in 2009?Gordy Mond
January 23, 2009 — 1,497 views
The thought of the U.S. dollar collapsing in the way it's being looked at today, would have been unheard of in our past history. Sure, we've had inflationary times before where the dollar was devalued, but it seem today we are encountering a perfect storm of conditions nobody has any control over.
Among the points converging are low interest rates, U.S. Treasury bonds ready to burst, the dollar being view as very risky by foreign government, including giant trading partner China, government offering bailouts indiscrimately to private industry, increased socialization of the economy, China starting to sell some of its Treasury holdings, China using its own currency for business transactions internally, and the unending printing of dollars by the federal reserve to fund all the programs and deals the government has pledged to the people.
Add this to the unstoppable migration of American baby boomers from work to retirement, and all the entitlement programs connected to that which will cost trillions to maintain, and you can see the perfect storm gathering which could cause the total collapse of the U.S. dollar.
The greatest threat, which is always hidden from the unknowing public, is the vicious onset of inflation - which the government sponsors by its financial printing press - which people don't understand the causes of. They just see that for some reason, it costs a lot more to live than it has in the past, not comprehending the causes behind it.
With these forces working to drive the value of the U.S. dollar down, China would struggle to provide the previous low cost goods it has in the past, as significantly increase the price of goods if the yuan raises in value against the dollar.
So will the U.S. dollar collapse in 2009? It'a a very real possibility. The government refuses to heed the calls of many economists and financial experts to quit interfering, which historically has proven to make matters worse and prolong the pain.
With all the other forces working together, we could very well see the dollar collapse and become the equivalent of a third-world currency. The perfect storm is gathering in the near future, we could be in for a very rough ride.