foreign currency will buy more US $ than it does now, it might be a
smart more to buy some of that currency. Assuming that you turn out to
be correct. And I think it is possible that you are, Just saw the
other night that about 1/3 of the deficit is coming due in 1-2 years
and another third in 3-5 years. And it's a very large deficit. The
only reason it's kinda ok now is that interest rates are so low...
suppose some event transpires which creates a greater emand for the
money?
Dana
----- Original Message -----
From: Gruss Gott <[EMAIL PROTECTED]>
Date: Thu, 16 Sep 2004 15:28:40 -0500
Subject: Re: haplessly marching like lemmings into the sea.
To: CF-Community <[EMAIL PROTECTED]>
Hi Won,
In January 2004 the IMF sent a letter to theUS warning it that it was
nearing insolvency; so I think that's the first step in prevention as
you pointed out. I'm not suggesting that we'll get to the point that
the US can't pay it's loans, but it will get to the point where the US
has to make it's bonds more attractive to buy since we don't save
enough money to operate ourselves.
As the lender's population ages, and they need more of their own
money, and they'll decline to lend it to the US. That means the $2 -
$4 billion per day that we borrow will get a heck of a lot more
expensive, right? That would mean high inflation.
I think this is what Paul Volcker, former Chairman of Fed, was
referring to a "crisis" that he predicted would happen within 5 years.
That is, he thinks monetary policy will have to be significantly
tightened and than means that US currency will be devalued relative to
say the Yen, Yuan, or Euro. In fact we've already lost about 40% of
value against the Euro since 2000.
So this is the question - if I think the dollar will continue to drop,
and inflation will spike up, wouldn't I be best off in foreign
currency? That way I could always trade, say, Euros for dollars, to
hedge inflation, right?
Thanks!
Gruss________________________________
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