Reality vs Socialism
This is not an if, but a when scenario, Massachusetts.
It is a problem of Socialism, of government. Yes, Washington is not the solution; it is the problem. Springfield, you mimic the DC dolts.
Put a twist to a Daoist principle here. “The farther you go, the less you know.” Lao Tse had politicians in mind when saying this.
Part 3 of this report, links to part #1&2 are at the site.
I’ve extracted the following from the report for this is why China is reducing exposure to the dollar.
China inoculates itself against dollar collapse
Summarizing the escalating risks of a dollar crisis
The bubble in US Treasuries is getting increasingly massive and unstable with each week that passes. Deepening global risk aversion is keeping investors lined up, so far, to buy Treasuries - especially short-dated ones. And the deepening economic crisis in the US is moving its own citizens to join in the buying spree.
If the Treasuries bubble persists for much longer, and especially if it continues to mount, the massive and dangerous distortions in the global financial system and the Treasuries-induced strangulation of its credit markets will only become more severe, likely leading to a meltdown somewhere in the emerging markets, one of whose effects will almost certainly spread to engulf the severely weakened Western European and US financial sectors and plunge particularly the US economy into a deep depression, with potent negative effects upon the dollar.
Such an eventuality will tend to force global investors to evaluate the safe-haven appeal of the dollar based much more on the fundamentals of the US economy, and that will portend a stampede out of the dollar and a potentially chaotic bursting of the massive Treasuries bubble. Hence, even if the US finds buyers for its huge sums of new sovereign debt now beginning to flood the markets, the picture does not look good for the dollar beyond the short term.
Obviously, if the US reaches the point where it fails to find sufficient buyers for its new flood of Treasuries, that will also become a perilous situation for the dollar and for the huge Treasuries bubble, which will almost certainly burst as global investors seek better stores of wealth in hard assets, following the lead of China’s central bank.
Either way, the US is engaged in the implementation of extremely risky and potent inflationary, dollar-debasing policies, making a loss of global confidence in the dollar in the short to medium term a virtual certainty. Even if the massive spending does restore economic growth, the US economy is likely to remain very weak for some time. That will make it extremely difficult for the US Federal Reserve to tighten monetary policy to fight off the inevitable and potent inflation that will result from today’s shortsighted policies.
When the Fed attempts to tighten, the US economy will likely be plunged into a second-round recession or depression, with obviously awful effects upon the dollar. But if the Fed fails to tighten sufficiently and quickly, runaway inflation will ravage the currency anyway.
A made for TV movie called ”Welcome back Carter” and the sequel “Movin’ on Down” starring BHO and a cast of 535 jokers.
Everybody can stay home and watch; ‘cause that’s all there will be to do.
March 19, 2009 at 9:53 am | Trackback
