Familiarize yourself with the Guidotti-Greenspan rule...

[roamer65]

http://en.wikipedia.org/wiki/Guidotti-Greenspan_rule

The United States now miserably fails this rule.

http://www.marketoracle.co.uk/Article15449.html

Expect a dollar crisis very soon, IMO.

[AtheistCrusader]

1. Why didn't we default anytime in the last 8 years?

Surely we've been afoul of this rule, since very shortly after Bill Clinton left office.

[roamer65]

2. The dollar is a reserve currency...for now.

That status has afforded it some immunity.

But we will now test that immunity with the recent 3x increase in M1 money supply, and the attempt to rollover $3.5T in short-term debt.

The Fed will monetize most of the $3.5T, IMO.

[AtheistCrusader]

3. By 'monetize'

for those of us without economics backgrounds, you mean print cash or sell horrible yield bonds?

[roamer65]

4. Debt monetization definition.

Good explanation at wiki. See especially the "Monetizing debt" section.

http://en.wikipedia.org/wiki/Monetization

As the Federal Reserve converts Treasury paper, mortgage backed securities and other toxic paper to cash, this becomes what is called "hot money" and is helping to fuel the dollar carry trade...along with the zero percent "hot money" available from the Fed.

The M1 money supply has increased by $400B in just the last month or so.

THe buzzword they like to use to instead of "debt monetization" is "Quantitative easing".

[dixiegrrrrl]

5. the 2nd link indicates a debt default very soon. Quite Scary.

[roamer65]

6. I'm not sure if we'll have an outright debt default.

But I now believe more strongly than ever that the Federal Reserve will monetize MUCH more gov't debt. They are risking an extreme currency crisis.

[FlyingTiger]

7. The second link is a joke.

The author makes so many factual errors that I couldn't even finish it. Let's just go with one of the most basic as an example - the "hard currency reserves" part. If the government tried to sell off its foreign currency, gold, and oil as suggested - the latter two not even being "hard currency," but, hell, let's play along for shits and giggles - the markets for each would crash, and the resulting deflation would actually make it HARDER to pay off our debts, not easier.

A dollar crisis won't start with the dollar, ironically enough. You're right to be worried, but being worried in the right way is important if you want to see the right signs.