Tyler_Durden
01-24-2013, 04:45 PM
http://www.nationmultimedia.com/opinion/The-big-challenge-as-currencies-face-collapse-30198591.html
The US dollar is also facing a crisis of confidence. The timing to watch is March onward, when the White House and the Republican-controlled Congress will negotiate the US debt ceiling of $16 trillion. Given the animosity between the Democrats and the Republicans, the conflict might spill over into the financial markets, resulting in a collapse of confidence in the US Treasuries market. If buyers of US Treasuries do not show up and the Federal Reserve can't compensate for all shortfalls, the dollar will tank. A dollar default looks increasingly possible.
The US's balance sheet looks ugly. The US debt is $16 trillion, equivalent to 100 per cent of the GDP. The US government's budget in 2012 was $3.8 trillion. Tax revenue was around $2.5 trillion, resulting in a budget deficit of $1.3 trillion. But the US off-balance-sheet debt is believed to exceed $80 trillion, which is by far higher than the world's GDP of $60 trillion. In fact, John Williams of Shadowstats believes that the US is creating $7 trillion in new debt every year. Since this is the case, the US Federal Reserve will have no choice but to monetise the government debt indefinitely. The dollar collapse is a matter of time.
The US dollar is also facing a crisis of confidence. The timing to watch is March onward, when the White House and the Republican-controlled Congress will negotiate the US debt ceiling of $16 trillion. Given the animosity between the Democrats and the Republicans, the conflict might spill over into the financial markets, resulting in a collapse of confidence in the US Treasuries market. If buyers of US Treasuries do not show up and the Federal Reserve can't compensate for all shortfalls, the dollar will tank. A dollar default looks increasingly possible.
The US's balance sheet looks ugly. The US debt is $16 trillion, equivalent to 100 per cent of the GDP. The US government's budget in 2012 was $3.8 trillion. Tax revenue was around $2.5 trillion, resulting in a budget deficit of $1.3 trillion. But the US off-balance-sheet debt is believed to exceed $80 trillion, which is by far higher than the world's GDP of $60 trillion. In fact, John Williams of Shadowstats believes that the US is creating $7 trillion in new debt every year. Since this is the case, the US Federal Reserve will have no choice but to monetise the government debt indefinitely. The dollar collapse is a matter of time.