Dollar Crash, Part III

19 Jun

Dollar Crash, Part III

The Fiddle-Dee-Dee Chronicles

We have written a couple of important posts lately about a coming dollar crash.  

In Dollar Breakdown Ahead! we cited former Yale economist Steven Roach, who says, ““U.S. living standards are about to be squeezed as never before.”

We followed up on Roach’s observations in “More on the Coming Dollar Crash”.  Roach says that there’s not much that Washington can do about the new dollar crash.  It’s already baked into the cake because of what they’ve already done.  Things like the Federal Reserve’s money printing, the $4 trillion deficit, and the $26 trillion national debt.  

(By the way, the national debt is growing so fast it is getting hard for us to keep up.  When we say its $24 trillion, it suddenly shows up as $25 trillion.  Once we start using that number, it’s too late.  Just the other day, on June 10, it broke above $26 trillion.  Since then they’ve added another $145 billion in red ink.  IN JUST A FEW DAYS!  You can follow the explosive growth of the debt on a daily basis at this US Treasury site.)

“The dollar is going to fall very, very sharply,” says Roach.  He thinks it could lose as much as 35 percent of its value.    

All of the things that Washington and the Fed have done lately have been ill-considered.  That’s not just our judgement.  They know it, too.  Fed Chairman Powell said that the Fed has “crossed a lot of red lines that had not been crossed before.”  He says “you do that and you figure it out afterward.”

Figure it out afterward?  That sounds to us like Scarlett O’Hara is in charge of monetary policy.  “Fiddle-dee-dee!  I’ll think about that tomorrow!”

Nothing they have done has fixed anything.  It has only pushed the confrontation with financial reality a little further down the road.  By then, the dollar and debt problems will be bigger.  The collapse will be even more destructive.  

Powell went to Georgetown Prep.  He has a degree from Princeton.  He has a law degree from Georgetown, where he edited the law journal.  Neither he nor Yellen and Bernanke before him can be called stupid.  But how could they be so disconnected from reality?  No wonder James Grant complains that the dollar used to be on the gold standard.  Now it’s on the Ph.D. standard.

Grant points out that Powell “does business in a building infused with the doctrines of the hundreds of doctors of economics on the Federal Reserve System’s generous payroll.”  Yet they don’t know what the consequences of their actions will be? 

Fiddle-dee-dee, indeed!  

We’ll, we are students of monetary history, so we’re just going to buy more gold!  

We advise you to do the same.