Thursday, October 29, 2009
Was Franz Pick Right After All?
"It is only fitting on a day where the price of gold hit a new, nominal high that I should discuss the last days of the US dollar as a 'reserve currency.' ... Instead, it is the pseudo-money, the paper 'fiat currencies' which are currently all plunging steadily downward in value--with no currency able to keep up with the collapse of the US dollar. ... For decades, the Gulf oil producers have had their currencies 'pegged' pegged to the US dollar (a fixed exchange rate versus the dollar) as part of their massive oil-export business to the US. ... However, as the US economy degenerated into a Ponzi-scheme economy (where total collapse is now only avoided through creating ever-larger-asset-bubbles), the currency-peg of the Gulf regimes has become poisonous to their own economies--essentially forcing them to 'import' US inflation (which the US government claims doesn't exist). ... Indeed, it is likely that crushing the crude oil market was in part vindictiveness by Wall Street--punishing the Gulf states for turning their backs on the US. ... If this wasn't sufficient, by itself, to provide the impetus for the secret deal (or "non-deal") between Gulf oil-producers and their new, best customers, the US government has provided the final impetus itself--with its permanent near-zero interest rates. ... As a result of this policy-of-failure, the US dollar is becoming the new 'carry-trade' currency. ... The consequence of the carry-trade is that the currency which provides 'free money' is now dumped into global markets in unprecedented quantities. ... Thus, the US's incompetent, two-party dictatorship is essentially forcing former economic 'partners' like the Gulf states to drop their reliance on the dollar as a matter of economic survival--due to their essentially permanent, near-zero interest-rate policy. ... Instead, the more likely options are that the US either suffers a debt-implosion (like the former Soviet Union), or ignites hyperinflation--through reckless money-printing required to avoid a debt-implosion. ... In all these scenarios it is nothing short of economic suicide to have holdings in US dollars, or to simply hold dollars as a currency 'reserve'. ... The new, nominal high today for gold is not an ending, it is a beginning--while for the US dollar, the 'obituary' is already written", original italics, my emphasis, Jeff Nielson (JN) at Gold Eagle, 6 October 2009, link, http://www.gold-eagle.com/editorials_08/nielson100609pv.html.
JN, you're 26 years late. Franz Pick, 1898-1985, wrote The US Dollar: An Advanced Obituary in 1983. If curious, you might find a used copy of this out-of-print gem. See also my 8 January 2009 post: http://skepticaltexascpa.blogspot.com/2009/01/galbraiths-dialectic.html. Import inflation? Jacques Reuff screamed about in the 1960s. That's it, cheat: Arabs, Chinese, Russians and Japanese to float Wall Street. This is wonderful foreign policy. It's also war-mongering.