The government/fed can do a lot of things to defend the dollar. They are not just going to sit there and watch it become worthless. I’m sure they would fight just as hard to save the dollar as they did the stock market/banks/economy.
They haven't done anything for the economy. The government doesn't actually produce anything. All it does is redistribute resources. It takes from A and gives to B. Shuffles stuff around. If governments could create anything, then the Soviet Union would still be around. The wealthiest countries would be Cuba and China.
All wealth is created in the private sector.
They didn't save anything except bankrupt institutions from going bankrupt, by taking money from the healthy portions of the economy and redistributing it to the insolvent parts.
It doesn't matter if they fight. If the various sovereign wealth funds switch to another currency, IMF special drawing rights, or a basket of commodities, then there is nothing they can do. Poof. Hyperinflation.
The Schiff thesis in 2006, was exactly what we are seeing today. They have brought rates down so low, that they can't raise them, and yet rates are so low, the dollar is sinking. They are in a catch 22. Raise rates, destroy the stock market and banks. Keep rates low, destroy the dollar.
This is what happens to every fiat currency over the long run. Eventually, the government prints its way to a currency crisis. Why? Because a government that can't deliver SS checks and pay for medicare, which can't pay for oil, or the wages of its troops, collapses. No one willingly pays taxes to (or votes for) a government which can't provide basic services.
So the government will do the only thing it can do. Print money. Hyperinflation.
They have said that they have exit strategies for stuff that they have done and will perform them.
Bob Murphy, who is the author of the Politically Incorrect Guide to the Great Depression and a brilliant economist, explained a couple weeks ago in Greenville NC at a conference that there is no exit strategy.
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I’m not that great at history, but I doubt this is even close to the most stressful thing the dollar has ever been through.
The US dollar defaulted twice. Once under FDR, when he revalued the dollar from $20/ounce of gold, to $35/ounce of gold, and then again under Nixon, when the dollar went completely off the gold standard.
As it is strictly a fiat paper dollar now with absolutely no tangible backing, the next default is the last one. There is nothing to revalue paper to. This is the most stress because there is nowhere to fall back to if there is a dollar default.
I have noticed over the past few weeks everything is very focused on the dollar as it continues to weaken and gold, oil, and stocks head higher. So maybe it’s time for the fed to start reversing, raising rates, and w/e else it is they do.
It's strictly pie in the sky thinking that the same assholes who have devalued the dollar by over 33% since 2002 are now going to save it. That they were just fooling around by bringing the dollar and the economy to the brink of crisis. That they were showing off for everyone what masters of the universe they are.
You're entitled to believe whatever you want. But if you're smart, you'll cover your ass. Worst case scenario, you're right and Schiff is wrong. Bernanke really is the master of the universe, and Obama can feed the many with only 7 fish and 7 loaves of bread.
In 1988, the Soviet Union was a super power feared the world over.
In 1990, it no longer existed.
I'm sure there were lots of communist party apparatchiks in 1988 who still thought that the central planners could save the currency.
