What next? US dollar crash..??

[topcropper]

What would happen if the US dollar crashes? What would happen to Aussie interest rates, commodity prices, stocks, property, unemployment?

Poor old Kevin 747 is burning through the surplus at a great rate, but the US had no surplus to start with, and they are bailing out the entire banking system, plus goodness knows what else. You would assume the only way this can happen is to print money, so in theory, the US dollar should be getting less and less valuable. How long can it hold up?

Don't expect anyone to know the answer, as even the experts don't know, and everything is being made up as we go. Just looking for some speculative guesses. Say anything you want, cause anything is possible.


See ya's.

 

[boomtown]

Things are so wild atm that anything goes but I would have to call no crash on the basis that the US dollar is the world's defacto global currency and in consistent daily demand for settling global trade. Global trade woud have to collapse before the USD collapsed. And despite the Baltic dry index - we are a long way off from that scenario.

 

[topcropper]

Spose all countries are printing money, so it all cancells each other out.

In the scenario where the US dollar plunges, and commodities don't rise, I'm out of business, as would nearly any other Aussie exporter. Grain is already at cost of production.


See ya's.

 

[plusnq]

Spose all countries are printing money, so it all cancells each other out.

In the scenario where the US dollar plunges, and commodities don't rise, I'm out of business, as would nearly any other Aussie exporter. Grain is already at cost of production.


See ya's.

Hi TC

And then the next boom market starts as demand exceeds supply. People have to eat and have energy supplies. If the cost of production is less than the price then people won't produce. Unfortunately there will be a lag effect and everyone will feel it.

My thoughts are that commodities soft and hard will maintain relative value, so a US dollar drop in purchasing power will see these rise in price due to inelastic demand.

Otherwise its off to Zimbabwe to eat roots and leaves

Good luck TC.

Cheers

Shane

 

[Sunfish]

There have been headlines saying that the US is expected to double it's money supply in 12 months. That is unprecedented in a "stable" currency. But what do you measure it against? Everyone else is inflating like hell too, including us. So we measure it against gold, but that's down $20 too. Show me any logic, anywhere!!!

Oil is off another 5% o/n and while that is nice for the motorist it does not bode well for the world economy. We have passed peak (conventional) oil so there is no oversupply so why the drop? Only two explanations I know of are that hedge funds are selling everything they can sell, or that demand destruction will be massive. That destruction can only happen in a massive recession.

Don't go out without your tin hat.

 

[plusnq]

Maybe Alcoa is looking cheap then?



Overall the fundamentals win out but in periods of great disruption sentiment rules.

Cheers

Shane

 

[Sunfish]

Just be careful Shane. ATM there is no fundamental truth. All the old rules have been thrown out.

Things will get back to rationality some day, just not yet.

 

[boomtown]

US M1 may double but if US M3 has already halved where does that leave us.

 

[Nathan]

this question needs a long winded response, but in short i will state the following....

it will create global hyperinflation... comodidty prices will skyrocket compared to us dollar (including petrol) it could collapse the fedral reserve as this is a private entity along with all the money system in america.

savings will get wiped out, along with poor and middle class americans will tumble.

interesting times.

 

[aussierogue]

Hi boomtown

Why would you say 'despite' the baltic dry index. We are only now starting to see carnage in bulk freight markets really play out to the wider economies..

 

[boz]

In my opinion it is a scenario not that unluckily:
it could happen if the US public debt gets out of control and the Economy and share market in US sink like there is no bottom. Of course to have a collapse in the US$ means that other currency will have to emerge and those country give more confidence in Investor then US.
The outcome of a collapse of US$ in my opinion will be skyrocket inflation wordldwide and Gold going up even over 5000$. Probably resources and home prices will do well together with inflation.
About the US money supply I regulary check the FED numbers and at the moment looks ok and under control (specially after the money given to the FED and treasury for the bailout)

 

[Sunfish]

There is a chart of this here:

http://www.shadowstats.com/alternate_data

It seems to show the rate of increase of M3 has halved. It looks inflationary to me though.

US M1 may double but if US M3 has already halved where does that leave us.

 

[Sunfish]

As an exercise in logic I like this guy's thinking. He explains why you should plan for high impact, low probability events.

http://www.chrismartenson.com/crashcourse/chapter-20-what-should-i-do

I haven't listened to the other chapters so I do not endorse his conclusions, necessarily.

 

[warmed_cockles]

Keep in mind that M3 is a not the most accurate figure. For instance, if you have an untapped line of credit on your house, then the contribution to M3 is zero.

But you draw on it and put it in a deposit with another bank, then M3 increases by both the amount you've drawn down and the amount you've deposited.

In the US this is happening. People and businesses are accessing as much of their credit lines as they can before they are withdrawn, and storing that money in more liquid assets (cash).

 

[Aaron Sice]

be wary of US inventories figures as well - they include warehoused goods, which is clearly on the rise now people arent buying yet it's still counted as being "moved off the floor" - nice general term there which assumes being "sold" but can mean a plethora of things.

why the greenback is holding i have no idea - there's NO incentive to invest in treasury bonds, no incentive for cash bonds....well, pretty much no incentive full stop....

 

[willair]

What would happen if the US dollar crashes? What would happen to Aussie interest rates, commodity prices, stocks, property, unemployment?

Poor old Kevin 747 is burning through the surplus at a great rate, but the US had no surplus to start with, and they are bailing out the entire banking system, plus goodness knows what else. You would assume the only way this can happen is to print money, so in theory, the US dollar should be getting less and less valuable. How long can it hold up?

Don't expect anyone to know the answer, as even the experts don't know, and everything is being made up as we go. Just looking for some speculative guesses. Say anything you want, cause anything is possible.


See ya's.

Topcropper,i'm not sure what would happen if the US Dollar hits the gutter and after watching the CBA-NAB over the past few days,and as most stock prices are expressed in dollars then i think there is something that our Government knows that most of us don't,maybe zero income from all shares resulting from price level adjustments over the past one year landslide,If the US dollar implodes then the only thing worth money will be a german made semi-auto with a 30 shot clip,and a 100 kilo bag of rice..
..willair..

 

[MichaelW]

OK,

Here's a really great read for the Doom and Gloomers which predicts a huge USD crash and talks through the implications. Might get your heart going, which I secretly think is one of the key reasons people love reading all this D&G so much. Bit of a buzz...

Surviving a coming USD collapse

Key message is buy all hard commodities now to hedge against currency deflation. Gold rates well too. Thommo will like this one...

Cheers,
Michael

 

[Sunfish]

Reading Gold Eagle, Michael. Are you a closet gold bug?

 

[plusnq]

Topcropper,i'm not sure what would happen if the US Dollar hits the gutter and after watching the CBA-NAB over the past few days,and as most stock prices are expressed in dollars then i think there is something that our Government knows that most of us don't,maybe zero income from all shares resulting from price level adjustments over the past one year landslide,If the US dollar implodes then the only thing worth money will be a german made semi-auto with a 30 shot clip,and a 100 kilo bag of rice..
..willair..

Ever tried to carry a 100kg bag of rice? Hard to run with it, aim and shoot at the same time

 

[boomtown]

The Baltic Dry Index is a measure of seaborne freight only.

If you have been to Finland and seen the lines of hundreds of semi trailers loaded with new BMWs etc waiting to cross the Russian border you will know there is a hell of a lot of world trade that goes by lorry.