jg, the money is already in circulation. It’s responsible for the big bubbles in assets, and for funding all our consumer spending. It’s the money used by Visa and MasterCArd, by private equity financing, buying flaky exotic mortgages, and government debt, US equities, etc.

So the question is *not* what happens when the money goes in circulation, because it already is (in assets though) but rather what happens when the money is moved out of US assets?

Where will it go, and how much will long term interest rates climb when the demand for US Treasuries declines? Something like 50% of our US Treasuries are held by foreigners.

When the foreigners sell off dollars, the demand for dollars goes down, lowering their value. That means our exports will be cheaper and our export trade will improve, possibly. It also means our imports will be more expensive. I believe our inflation is held low by cheap imports from other countries, but with a lower dollar, that would no longer be the case.

This is a question that I wish Roubini would address, but I guess nobody really knows. If not gold, then what?