“In other words, if the trillions of dollars floating around the world are suddenly dumped by foreigners and traded into Euros/Gold/RMB/Swiss Francs….then WHAT CAN the Fed do to prevent the collapse of the dollar?
It seems to be that in that scenario, the value of the dollar would collapse. What am I missing?”
Exactly. You’re not missing anything. That scenario is entirely plausible. How likely it is, we just don’t know. But it’s certainly possible.
Guys, I think what’s important to keep in mind is that we are in UNCHARTED TERRITORY now. Our recent (and distant) history no longer apply. The “rules” no longer apply. So it is virtually impossible to scoff at any scenario under these circumstances. As we move forward in the days and weeks ahead, we will almost certainly become roadkill if we act based upon our prior experiences and the rules we have observed for most of our lives. I think a Black Swan moment is at hand, and new rules for a new world are about to be laid down.
CA Renter, I wholeheartedly subscribe to your mother’s philosophy: bad things happen very quickly — or at least, too quickly for most to act in order to avoid the unfortunate consequences.
On a side note, I read something very interesting today by Jim Cramer, of all people, that tapped into something I’ve been gnawing on for months now. Can it really be the case that so many *intelligent*, *skilled* and experienced professionals in our government did not see the tsunami that was brewing in the unregulated world of derivatives and mortgage backed securities? I acknowledge that greed and political expediency can compel men (to do horrible things, but if I were a prosecutor I think a strong case could be made that the stewards who were placed in charge of our government to guide and protect the citizenry acted with extreme recklessness bordering on…intent to harm.
I don’t know if there are forces at work that are intent on destroying our financial system. But I am almost certain that destruction is unavoidable at this point.
Cramer: Feels like Financial Terrorism to Me
“It almost feels like financial terrorism. It feels like we are in a moment where there are institutions that are willing the destruction of our banks, institutions that want the nation’s financial system to fail.”
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