[quote=4plexowner]”but Mr Bernanke will put a stop to that”
by this comment I assume you mean that he will buy US Treasuries all along the curve in order to suppress both short and long-term interest rates – how else can he stop rates from rising?
in order to buy US Treasuries the Fed is already engaging in “quantitative easing” (which is just the latest mind-fuck for printing fiat currency as fast as possible) and you are proposing that they will increase these efforts
“Only in extremis will it proceed to the next step, where these exporters feel the future value of the dollar is so unreliable that they will not accept ANY AMOUNT of future dollars in exchange for a real good today.”
so how much “quantitative easing” can the Fed perform before we reach the “extremis” state?[/quote]
Bernanke has completely lost control. The Fed is now at the mercy of the purchasers of our debt. And he won’t be able to restrain interest rates for long. So I believe we will be slipping into the extremis state within the next twelve (12) months, if not sooner. At that point I would expect exporters to begin requiring many more dollars for products sold to the U.S., and in the case of hard assets with higher *real* value (such as oil), dollars may not be accepted at all, and this is already the case with at least one OPEC country (Iran) that has recently decided that the greenback — no matter how many they receive — is simply too worthless to purchase their oil. Venezuela will probably follow suit, as Iran is putting pressure on other OPEC countries to ditch the dollar altogether. I wouldn’t expect this to happen overnight, but when the dollar collapse begins in earnest I wouldn’t count on being able to find $2.59 gas. Think more along the lines of $5.
And this doesn’t help our prospects:
“Obama: ‘We’re out of money'”
I wish he would have realized that about $11 trillion ago.
