Weak US Dollar Will Cause a Correction…Or an Apocalypse

“A weak dollar is the driving force behind global liquidity,” writes Alan Ruskin in the Financial Times. Ruskin’s point is the one we make every week or so. “The U.S. has a technology,” as Ben Bernanke put it, “called the printing press.” And lately, the United States has been cranking so hard the handles are falling off. The dollars come hot off the press…and even before they have cooled, they are on their way across the vast oceans to far Cathay…where they buy luxuries that the Homeland can’t produce. In today’s Financial Times, for example, one Chinese computer maker says it is making so much money it’s hardly knows what to do with it all. Lenovo – the PC maker bought from IBM two years ago – reported that profits ‘rocketed’ for the full year.

American emissions of paper money cause a kind of chain reaction of debasement. No country wants to see its own currency fall faster than the dollar – and especially not America’s major suppliers. (We used to refer to them as ‘trading partners,’ but the term seems sadly out of date, since the trade is almost only in one direction). The dollar-receiving countries rev up their own printing presses…layering various colors of ink onto sturdy pieces of paper so that they may use it to buy America’s currency.

Result #1: more paper money everywhere.
Result #2: lower interest rates
Result #3: huge liquidity boom.
Result #4: big run-up in asset prices…m&a activity…global bubbles where some clown pays USD$71 million for a Warhol,

Surely there is a Result #5.

What? At the very least, it will be – as Mr. Greenspan suggests – a correction full of drama in the most affected markets. At the very worst, it will be something that mimics the four horsemen of the Apocalypse: worldwide depression, revolutions, wars and rumors of wars.

Bill Bonner
Markets and Money

Bill Bonner

Bill Bonner

Since founding Agora Inc. in 1979, Bill Bonner has found success and garnered camaraderie in numerous communities and industries. A man of many talents, his entrepreneurial savvy, unique writings, philanthropic undertakings, and preservationist activities have all been recognized and awarded by some of America’s most respected authorities. Along with Addison Wiggin, his friend and colleague, Bill has written two New York Times best-selling books, Financial Reckoning Day and Empire of Debt. Both works have been critically acclaimed internationally. With political journalist Lila Rajiva, he wrote his third New York Times best-selling book, Mobs, Messiahs and Markets, which offers concrete advice on how to avoid the public spectacle of modern finance. Since 1999, Bill has been a daily contributor and the driving force behind Markets and Money.

Leave a Reply

3 Comments on "Weak US Dollar Will Cause a Correction…Or an Apocalypse"

Notify of
avatar
Sort by:   newest | oldest | most voted
Cyprus Yannis
Guest

I believe there will be a major correction in world markets, stocks will fall around 40%, property the same and unemployment will escalate. The USA cannot continue forever living with this debt bubble. Perhaps a major escalation of tensions then war with Iran for selling oil in Euro’s could be in the background, where is there a major build up of US military might now ? oh the Persian Gulf Straits of Hormuz, suprise suprise.

susan
Guest

u have been crying wolf for years and years and years

pullback global markets then up again

henryclark
Guest

the chinese know what to do with the trade surplus.Compound it for twenty years.So the currency needs to be tied.

wpDiscuz
Letters will be edited for clarity, punctuation, spelling and length. Abusive or off-topic comments will not be posted. We will not post all comments.
If you would prefer to email the editor, you can do so by sending an email to letters@marketsandmoney.com.au