Thursday, February 12, 2009
US Dollar, RIP-2
"When President Barak Obama called for 'sacrifice' in his inaugural address, he was really talking about the Chinese, Japanese and British who collectively continue to buy our Treasury bills. For some reason politicians think that these folks will continue to 'fund' our serial stimulus spending. ... Buyers of Treasurys must ask themselves: 'How long will it be before the U.S. government arbitrarily changes the terms of its outstanding debt?' ... The primary risk in our economy today is not economic performance, it is political risk. No one knows which shareholders the government might wipe out next", Richard Wottrich letter to the WSJ, 29 January 2009.
The US changed the terms of its debt before. In 1933 we took gold out of our money; in 1964 the silver. We repudiated the gold clause in the 1930s. Buy Treasurys at your peril.