Preparing for the Economic Typhoon

[donsu]

http://www.counterpunch.com/whitney04252006.html

Obliterating the Dollar ... and the Middle Class?

Preparing for the Economic Typhoon


-snip-

Is it really possible for one man to single-handedly obliterate the world's most robust economy?

-snip-

After 6 years of looting the public till, the cupboard is just about bare. Bush has chalked up another $3 trillion of public debt which sounds the death-knell for Social Security, public education, and the social safety net.

-snip-

That's right; the Fed is conspiring to reduce its debt payments by driving a wooden stake into the heart of the greenback. In three to six months the dollar will probably be valued at 1.40 to 1.50 per euro. That is, if the bottom doesn't fall out completely. After all, allies and enemies alike are pretty sick of the good old USA, so it wouldn't be out of the question for someone (perhaps, China) to start a sell-off that would end in disaster.

The dollar is now recognized as the empire's Achilles heel and the primary target for any asymmetrical warfare directed at America. If that means regime change at home, count me in. I'll worry about the wheelbarrow-loads of greenbacks for a loaf of bread some other time.

-snip-

How do you like the idea that half of your savings will be erased through executive fiat?

Since Bush took office the dollar has plummeted 30% against the euro. The only thing that has kept it from joining the peso is the skyrocketing oil prices which have allowed the Fed to keep the printing presses going at full tilt. That's because oil is denominated exclusively in dollars, so while the price per barrel continued upward, the Fed was able to circulate another $2.5 trillion of funny money. The high cost of oil has kept the dollar reasonably stable even though the twin-deficits have eroded its true value. Maintaining the monopoly on the sale of oil (which forces foreign central banks to hold billions of greenbacks in reserve) is critical to US prosperity. A switch to euros would weaken demand for the dollar and send the American economy into a tailspin.
-snip-
-------------------------------------------


protect yourselves while you can

last paragraph of the article:

Betting that George Bush will do the wrong thing for the nation is not a matter of conjecture; it is a mathematical certainty. He is deliberately destroying the middle class, the prospects for upward mobility, and the currency. The economic underpinnings of American democracy have been demolished in just 6 short years. Smart people will prepare themselves for the typhoon ahead.

[gordianot]

1. True, but they still manage to keep up appearances.

My prediction for the typhoon is 2010 and there will be a Democrat in the Whitehouse and possibly Democratic control of the legislative branch.

Too much to clean up.

[leveymg]

2. With a penny worth 1.4 cents of copper

That points to a pretty hefty increase in consumer goods. According to the principle of arbitrage, all tradable goods eventually adjust their prices. That applies to overvalued currencies, as well.