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Death Of The Dollar

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The fact that the U.S. dollar is a dying currency is a foregone conclusion. The (negative) fundamentals of the dollar are overwhelming, for two reasons: their magnitude and their irreversibility. These harbingers of the dollar’s doom center on three areas:

1) An ultra-extreme over-supply of dollars, due to several years of money-printing at a hyperinflationary rate.

2) A simultaneous collapse in demand for the dollar, as it loses its status as global reserve currency (replaced by China’s renminbi).

3) The irreversible decay and imminent collapse of the U.S. economy itself.

Those are the three, principal fundamentals of any currency: supply, demand, and the (supposed) “backing” for the currency itself, which (in the case of our paper “fiat currencies”) is nothing more than the economic output of the underlying economy. With respect to supply; any reader who considers it hyperbolic to depict the supply of dollars as “ultra-extreme” simply hasn’t seen the chart showing its exponential explosion. Indeed, describing the picture below as anything short of “ultra-extreme” would be understatement.

While the collapse in demand for the dollar hasn’t been as (frighteningly) spectacular as the explosion in supply, it is just as irreversible as the exponential curve above. The reason why this second, terminal fundamental is irreversible (as the dollar is replaced by the renminbi) is a direct function of the first and third fundamentals.

Because the value of the dollar has been grossly debauched through over-printing (despite its fraudulent exchange rate); the Rest of the World is rejecting it as a benchmark for global trade. Because the U.S. economy itself is in irreversible decline; the dollar could not be sustained much longer as a reserve currency, as a simple function of mathematics/economics.


Source: http://bullionbullscanada.com/us-commentary/26569-death-of-the-dollar


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