The End of the Dollar Hegemony

Max Keiser’s Death of the Dollar which aired on Aljazeera English in December 2006.

Successive US Administrations have had a policiy of borrow and spend. Producing countries, liek China, India and Japan, ahve amased Trillions of Dollars worth of IOUs from the US Treasury.  But can these loans be paid back? Today, US National Debt stands at

Bush Administration adds $4 trillion to National Debt

How is this debt going to be paid back, if ever? The only way to service this growing debt is to print ever more currency. And when these dollars come back to the US chasing goods, then there is going to be a Hyper-inflation, with too many dollars chasing too few goods…

This is a possibility now… For the first time ever, it is feared that US govt may default on its interest payments. Once that happens, no one in the world would buy U Treasury Bonds…

As was stated in American COnservative Magazine,

There are two ways for a nation to have a strong currency: export goods or export debt. Naturally, both kinds of exports require willing foreign buyers. Few countries have strong currencies.

For the past six years, America’s great export has been not goods but debt. Foreigners sell us oil, cars, computer components, and other goods. In return, we sell them debt and other financial instruments—government bonds, corporate bonds, and securities backed by the mortgages of American homeowners—for which foreigners have seemed to have an almost insatiable appetite. From 1997 to 2002, imports of goods and services increased by a third, while exports of goods and services were flat.

Americans are living beyond their means and Asia is currently financing that. But eventually the Asians/Europeans will stop financing the USA and then the bubble will burst.