Declining Dollar And Economy

The news that came out on Thursday that the implied AAA Credit rating of the United States will eventually be downgraded. The dollar was hit hard again on Friday and that could have some serious implications when it comes to stabilizing our economy. What are implications of a weak American dollar. The first problem is high inflation and a perceived greater risk of holding the currency and dollar denoted assets. The greater perceived risk, investors will ask for a higher rate of return. This means that interest rates will be going up in America. The biggest problem is a significant exit of foreign capital from our markets. Therefore, can you imagine conversations between China, Japan and Russia the largest holders of our debt. The United States is forced to pay higher interest rates to attract capital, the economy slows as the cost of debt services increase. The Obama administration may want a weak dollar because it will help domestic production relative to our continued reliance on imports. Therefore, by generating some inflation is a means of devaluing our outstanding massive amount of debt. Whomever, is in debt currently can actually pay back those debts in future dollars that are worthless. Finally, we can stem the decline in the value of the dollar by increasing short term interest rates, that is, Federal Fund Rates currently sitting a 0-.25% will have to go higher. Higher rates means slowing down the economy. Although given the current economic turmoil, the Fed may have to increase the Federal Fund Rate even sooner than they desire and we could suffer through a nasty curse of STAGFLATION. The Obama Administration must find a credible way to protect the value of the dollar. This could be the first step in the downfall of America.

DEPRESSION 2009 "PART ONE"

The collapse of the whole American economic system is coming soon and most Americans are not being told the truth about the true nature of our financial problems. In major cites like Detroit they are already suffering a Depression with the lack of city services and jobs. The Federal Government will have to help the average American who happen to be unemployed and the poor with programs such as unemployment benefits, Medicaid, Social Security, and Food Stamps. The American people in a Washington Post Poll feel that the new Obama Administration policies will bring us out of a depression but, they happen to be sadly mistaken. The American people believe that there leaders can lead them out of a financial crisis with there socialist policies. The Average American does not know history and they believe that the FDR policies of the 1930's will lead us out of this depression but, it was actually World War Two that lead us out of the Depression. I feel that these large bailouts and stimulus packages will destroy the American currency all around the world. The American currency in the near future will be like the German currency in the 1920's when you could not by a loaf bread with a wheel barrel full of money. I believe that the current economic conditions are comparable to a war fought between Central Banks around the world and the private sector and the war is likely to be a protracted and will lead to high volatility in all asset classes. There will be big up swings and down swings in the market and that will show you the true instability in the world markets. The Federal Government is terrible at running the economy from Washington. The American Economy will soon have Hyper-Inflation at a high level because, they are making the same mistakes that Germany, Zimbabwe and other failed countries economic policies from the past. If you see the commercial real estate market and the bond market crash that is when you will see the American currency collapse and you will see a new North American Currency. Finally, this is part one of several articles I will write about the American Depression and the coming change in currency. The next articles will be about the new American Currency called the Amero that was sent to the China Central Bank early this year.