Quote:
Originally Posted by competentone
The problem is, what's going on is not really about a "recession."
We are experiencing the first stages of a fiat currency collapse.
Money is such a vitally important tool in the economy, that its collapse (actually its "destruction" due to government policy) creates massive disruptions in the economy.
You can't compare past recessions with what is happening now. We are in uncharted territory; the best comparisons would be to look at hyperinflations that have occurred in other countries.
|
In Mar 2008 when BSC went under, 1 USD was 0.64 EUR, 0.50 GBP, 1.00 CHF. Today 1 USD is 0.78 EUR, 0.65 GBP, 1.20 CHF.
As the financial crisis worsened, the USD gained against the major European currencies. At the same time, the USD fell against the JPY and CNY. The picture, to me, is that investors think the USD is one of the better houses in a bad neighborhood, that neighborhood being the major world currencies. Not the very best house, but neither the JPY nor CNY function as reserve currencies.
Hyperinflation has not emerged. I understand your arguments that it will emerge, and we have discussed at length whether the US is or is not similar to Weimar Germany, etc etc.
But so far, most investors would apparently rather hold USD than their own national currencies. And, judging by yields, most investors would rather hold US T-bills and T-bonds than other government debt.
Interestingly, gold also peaked in March/April 2008 and has fallen -20% since.