nd puts their $ somewhere else. The chart to the right is what happened to the spot gold price today. Yesterday it took a drop below 900, then skyrocketed. The U.S.D. took a similar drop against world currencies, and Bernanke is sacrificing the dollar, like I knew he had to.The reason China has not been ditching the U.S. is because if it did, the U.S. Dollar would tank, thereby making importing of chinese goods much more expensive. So China and the U.S. were in a little mexican standoff, but with one big difference. China has the advantage of a billion rice farmers that have not been urbanized, and a much cheaper labor force. Oh and did I mention massive amounts of cash?
Yesterday, to me was about the craziest (expected) news I've heard since Bear Stearns collapsed. Back when Bear went down, I said that this day would affect us more than 9/11 because of the fact that investment banks absolutely could not keep open because of their massive exposure to subprime losses.
Yesterday, the Federal Reserve (aka the printing press) said it was going to buy $300 billion of U.S. Treasuries.
THE U.S. IS PRINTING MONEY TO PAY BACK FOR DEBTS IT CANNOT AFFORD TO PAY - THIS IS A HUGE IMBALANCE PUSHING TOWARD A DRAMATIC DROP IN THE U.S. DOLLAR AND HYPERINFLATION. HYPERINFLATION IS GOOD IF YOU HAVE MASSIVE DEBT BECAUSE YOU PAY BACK YOUR LOANS WITH WORTHLESS DOLLARS.
This is what this is like. It's like a starving man cutting off his own foot, and making a stew. He will live a little longer having eaten his own foot, and he has another foot to eat if he needs to. He still has two hands which are important, but he will be walking around on ankle stumps. He will never be the same. He will die, and somebody will move into his apartment, clean it up and start over.
Someone stronger and with two feet. The apartment is the United States, and the somebody else could most likely be China.
1 comment:
printing money should be criminal
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