[quote=KSMountain]I’ll bet people thought we were down for good during the depression, and the dust bowl, and during the early 80’s what with the Japanese were going to kick our ass, etc, etc, etc.
It was never permanent.
Think I’ll pour a glass of Cab and sleep soundly tonight.[/quote]
You need to start sleeping with one eye open, KS. It appears that a growing number of people are beginning to do just that, as they are now realizing that the unthinkable CAN happen. I am starting to see more and more articles like the one linked below in mainstream news media. This would have been anathema a year ago. After all, we are talking about the world’s reserve currency!
I would like to reacquaint you with black swan theory: The Black Swan Theory (in Nassim Nicholas Taleb’s version) concerns HIGH-IMPACT, hard-to-predict, and rare events beyond the realm of normal expectations.
Prepare for the mother of all black swans.
“What Happens If the Dollar Crashes”
“This state of calm would vanish overnight, though, if the financial markets got a sense that the dollar’s decline was starting to snowball out of control. At that point, the invisible “force field” protecting the dollar would fade away, says Martin D. Weiss, chairman of Weiss Group, a financial data and analysis firm in Jupiter, Fla. Says Weiss: “We would become more like ordinary mortals and more vulnerable to attacks on our currency.”
The bearish case for the dollar is that the decline takes on a life of its own. Selling begets more selling. The world’s central bankers and finance ministers intervene to prop up the currency, but speculators, having tasted victory, aren’t scared off. Princeton University economist Paul R. Krugman once called this the Wile E. Coyote scenario, after the character in the Road Runner cartoons who runs off a cliff but doesn’t start to fall until he looks down and sees there’s nothing beneath his feet.
Speculation that the dollar is headed for a tumble can become self-fulfilling if traders rush for the exit. Ashraf Laidi, chief foreign exchange strategist at CMC Markets, a London currency and commodity brokerage, says “right now there is around a 30% to 40% chance we are going to see the dollar falling toward a crisis point.”
Do you like those numbers? Feeling confident that we won’t get our ass kicked? Because once we cross 50% all bets are off.
