Budget deficit for Obama's first term to be 3.8 trillion

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investorzzo's picture
investorzzo
Status: Diamond Member (Offline)
Joined: Nov 7 2008
Posts: 1182
Budget deficit for Obama's first term to be 3.8 trillion

I expect a Treasury bubble to inflate in the next several months as the Fed prints money to buy American government debt and when it finally collapses, rates will rise and the Dollar will begin its drastic decline as gold begins its surge up. Unfortunately for foreign creditor nations, the threat of economic mutually assured destruction will force them to have to face the effects of the inflation-default on their Treasury holdings. Not to mention trying to liquidate Treasury holdings would be tantamount to asking for a nuclear war with the United States. The USD won't see hyperinflation, like the GBP and EUR possibly could (and MXN almost certainly will), but it will face sharp devaluation once the Treasury bubble -- the final episode of the Greenspan-Bernanke trifecta of asset bubbles -- comes crashing down.

http://seekingalpha.com/article/134505-expect-the-treasury-bubble-to-con...

DavidC's picture
DavidC
Status: Silver Member (Offline)
Joined: Sep 29 2008
Posts: 243
Re: Budget deficit for Obama's first term to be 3.8 trillion

This doesn't make sense to me.

I can see each of the currencies, with printing, leading to (hyper?)inflation in the US and UK (and others) BUT changing interest rates and the RELATIVE values of each currency are what will affect the exchange rate. So, we could see hyperinflation in each country/region BUT with the exchange rate possibly not even moving, or with the dollar actually gaining value against, say the pound, if the US's interest rates move up before the UK's. So the USD could actually GAIN in value, relative to other currencies, not devalue!

Certainly, economically, the whole thing is one massive global mess that isn't being helped by the mendacity of those purporting to be getting us out it of it!

David

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