If USD collapses

[Dr_Who]

Whatss the best way to short $US? Short $US against $AU or EUR?

[ananda77]

Whatss the best way to short $US? Short $US against $AU or EUR?

Dr.Who:

!!Be Aware though:

-the previous outline assumes that the Fed will be successful in re-inflating its way out of the down price spiral;
-however, there are big risks and, the bond market is the foremost warning sign, that the Fed efforts will NOT be able to stop the down price spiral; consequently, if depression digs deeper and prices will continue to free fall, including the price of gold, the US$ will enter into a major bull market;

Kind Regards

[arco]

Whatss the best way to short $US? Short $US against $AU or EUR?

Jack Crooks is calling the US dollar bullish now.

I cant find the article at the moment but you may be able to search Google for it.

[ananda77]

Friday, 12 December 2008
Deflation has become inevitable
http://londonbanker.blogspot.com/200...nevitable.html

Kind Regards

[arco]

The beginning of the end of paper money?

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[Aussie]

Dr.Who:

!!Be Aware though:

-the previous outline assumes that the Fed will be successful in re-inflating its way out of the down price spiral;
-however, there are big risks and, the bond market is the foremost warning sign, that the Fed efforts will NOT be able to stop the down price spiral; consequently, if depression digs deeper and prices will continue to free fall, including the price of gold, the US$ will enter into a major bull market;

Kind Regards

Jens O Parssons in the Dying of Money: Lessons of the Great German & American Inflations (Wellspring Press, 1974, p.71) best describes the initial ignorance, early warning signs and final consequences of inflation.

"Everyone loves an early inflation. The effects at the beginning of inflation are all good. There is steepened money expansion, rising government spending, increased government budget deficits, booming stock markets, and spectacular general prosperity, all in the midst of temporarily stable prices. Everyone benefits, and no one pays. That is the early part of the cycle. In the later inflation, on the other hand, the effects are all bad. The government may steadily increase the money inflation in order to stave off the latter effects, but the latter effects patiently wait. In the terminal inflation, there is faltering prosperity, tightness of money, falling stock markets, rising taxes, still larger government deficits, and still roaring money expansion, now accompanied by soaring prices and ineffectiveness of all traditional remedies. Everyone pays and no one benefits. That is the full cycle of every inflation"

For the many deflationists out there take particular note of the Parssons comments re faltering prosperity and tightness of money. This is a normal phase of inflation. Using the tsunami parallel first the ocean disappears (draw back) and its all sand for miles in front of you then out of nowhere appears a giant wall of water 10 stories high.

Right now most people are standing on the beach saying "where has all the water (cash) gone?" Those well studied on the patterns of tsunamis understand what this signals and have moved their families to higher ground by protecting themselves with physical gold and silver.

[ananda77]

Friday, 12 December 2008
Deflation has become inevitable
http://londonbanker.blogspot.com/200...nevitable.html

Kind Regards

Hi Aussie,

...my mind is made up about the strategies necessary to prosper further in 2009/beyond and:

-although the Fed will continue to use its magic box of tricks to continue the pumping of massive amounts of $$$$ into the system (these tricks will provide the windfall opportunities during 2009), this money-wave will hit an even more massive money-wall of debt; until this debt is largely purged from the system, deflation, inevitably, will run its course; and remember, $$$$ are the currency needed to pay down the debt and can not purchase gold...

...still very bullish on gold, but more for reasons like:

-its an asset class outside the ****ed banking system
-I have NO TRUST in the present political and economical system
-it is almost assured that gold will fare a lot better than any other asset class available under present circumstances

Kind Regards

[Dr_Who]

Thanks for the great articles guys, keep them coming. I have grave concerns for the global economy. The US is dragging us down a black hole. How long will the world keep bailing out the US?

My take is that the next crash will take us into depression, assuming we come out of this recession. If we cant dig ourselves out of this recession than it will go into a depression.

[Aussie]

Hi Aussie,

...my mind is made up about the strategies necessary to prosper further in 2009/beyond and:

-although the Fed will continue to use its magic box of tricks to continue the pumping of massive amounts of $$$$ into the system (these tricks will provide the windfall opportunities during 2009), this money-wave will hit an even more massive money-wall of debt; until this debt is largely purged from the system, deflation, inevitably, will run its course; and remember, $$$$ are the currency needed to pay down the debt and can not purchase gold...

...still very bullish on gold, but more for reasons like:

-its an asset class outside the ****ed banking system
-I have NO TRUST in the present political and economical system
-it is almost assured that gold will fare a lot better than any other asset class available under present circumstances

Kind Regards

All good reasons and you are right, opportunities will abound in some places as although the banks are not lending/spending at the moment, that may change next year and once the magic multiplier of fractional reserve banking does it's trick, the wave of inflation will be huge. I think there will be some giant bear market rallies in the US and other markets. Probably here and in Australia - follow on rallies I suppose, but they will ultimately prove to be short with huge declines as the world economy gets structurally weaker and weaker.

However, against this there is an enormous amount of derivative and mortgage hell to get through with the US "ALT-A" and "Option-ARM" resets starting next year, not mention commercial real-estate, auto loan and credit card failures. There are $100's of Trillions of "off balance sheet" interest rate derivatives held by the likes of JP Morgan, Chase and BofA. If things turn in the bond market and interest rates start to rise, these things are going to explode big-time.

Everywhere you look there are financial land-mines. A currency crisis is coming . . . my advice to anyone who does not yet have physical gold in their possession, is get some NOW while you can because even right now it is very difficult come by and in the near future for all practical and economic purposes it will be simply unavailable. Period.

[Dr_Who]

The bond market is the next big bubble to burst. Bernanke and Co will make sure of that.