Why the Dollar will NOT crash as most of you believe

the Fed is on a local(American) level. They are frying big fish.

My hunch is this: They could care less what you call the currency. They want as many countries as possible depending on a similar currency. They may call it dollar,or pixi stix, it doesn't matter.

Since most countries have some major interests tide to the dollar, the best currency to construct failure would be the dollar. "If you want a train to drive over a cliff, make the engine(dollar) go faster towards the edge, thus pulling all the cars over with it" Then offer a more attractive, life saving currency that includes a wider group of slaves.

It's about expanding the power to create and control the creation of money over as many people as possible. It's been going on since the invention of banking.

Remember, there are two very different forces at work, one in the FOREX or foreign exchange, which appears to be what you are talking about and the other, much more important, is the actual purchase value of the currency itself as an exchange unit within the economy itself. I care little about the FOREX, whether the Dollar "collapses" against other currencies or not, except as a profit generator, but I do care very much about the quality of the currency in terms of purchase value since that is what the American People must content with in their daily lives. The danger is the actions of the FED in expanding the money base, particularly at such a rapid and enormous rate. Such actions, along with the apparent quantitative easing that the FED appears the be heading, poses an incredible threat that this country has never really faced before.

It should be of particular note when considering the shell game that has been occurring over the last year. If you will recall several months ago the FED actually went to the Treasury for a relatively small "loan", just a few hundred billion and yet recently the Treasury has been "borrowing" from the FED. Does anyone see something odd in that scenario?

Of course, to ignore just what took place on August 15, 1971 is to ignore the foundation of the current economic dislocation and without having an understanding of the mechanics of converting the US Dollar into a completely irredeemable paper currency "substitute" there is no possible way to fully understand just what is occurring during this dislocation. The amount of distortion that was forced, not only on the entire economy of the US, but the entire world, is well beyond the grasp of most people and apparently it is relatively ignored by most in the economic and financial realms, but it is one of the most important points of understanding in breaking down just what happened in the Panic of 2008 and what is about to happen due to the distortions. The experiment began in 1971, but it has been a failed experiment with the most dire consequences imaginable, yet few appear to either understand or even consider just what happens to an economy which has been subjected to such a degree of massive distortion. The struggle of the financial system during this dislocation is only a signifier of far more disruptive events, it is after all the first layer of the political economy that was created during the transformation of 1971.

While it is true that the FED has held the position of monetary monopoly, the FED cannot, particularly in the state of economic dislocation currently taking place or even if the US Dollar was on the verge of collapse, increase interest rates, as the author says, to high levels, to do so would be suicide, not only in the political arena, but also economically. Besides that, this economy has over the years lost its tolerance of such increases. It no longer retains its free-market flexibility to maintain interest rate increases without going into massive convulsions. If you look at the years since 1971 you will readily be able to discern that growing intolerance for rate increases. Such intolerance signifies that the economy has become restrictive, bound and completely inflexible. The FED has already used just about every single weapon in its arsenal, it has little maneuvering ability at this point and, as I said well over a year ago, that when the FED lowers the rate close to the Zero Bound you know that the end is near. Well, that is exactly what has happened.

Look closely at what the FED has done, do you recognize any patterns that could be considered either consistent or even rational economically? I see patterns that are well-worn without any innovation whatsoever in terms of economic principles. In fact, it appears that they are playing the same game and dancing to the same tune they have always danced to. Why? Because they have nothing else they can do, they are so completely bound by a particular economic ideology that they can not see past their proverbial collective noses! They are lost, the blind leading the blind. So, like they always do, they target monetary policy, that is all they can do, all they have to work with and as usual, they are once again using that good old stand-by Inflation thinking that will solve the problems when the problems have been brought about by years of government intervention and economic distortions created through the very same monetary policies that the FED is using and promoting as yet another solution. It will not work, in fact it will only serve to create even more distortions which will produce even more convulsions that will increasingly become much more disruptive.

So, the FED has embarked on yet another attempt to re-inflate a busting bubble and in the process it is using the same techniques it has used time and time again, but on a much larger and much more dangerous scale. It is effectively attempting to bail-out a completely insolvent, illiquid banking system and it is doing this to maintain a type of structure that simply cannot be sustained through artificial means.

If you really want to understand the quality and therefore the condition of the US Dollar all you have to do is look at the FED Balance Sheet. While it appears that everyone is running for "safety" to the US Dollar instruments at the moment, the fact is that the quality of the US Dollar is drastically weakening and affecting the FED's Balance Sheet in ways that have not been seen prior to this disruption. Look at the "Assets" the FED holds, there has been an incredible degree of deterioration over the last few months in those "Assets" and since those "Assets" essentially back the liability column in the FED Balance Sheet, which primarily consist of the monetary base of this country, what do you think about the condition of such backing? Well, it is important to understand that the quality of those "Assets" is essentially what the FED uses to "defend" or "support" the value of the US Dollar on both the domestic and foreign markets.

Personally, I place no faith in either the FED, this government or the US Dollar because I can see that this economic dislocation is far, very far, from over folks.

http://www.1776solution.blogspot.com

“There is danger from all men. The only maxim of a free government ought to be to trust no man living with power to endanger the public liberty.”-Adams

http://www.safehaven.com/article-4244.htm

[Snippet]

It was a slap in the face to a cold war America already weakened by high inflation and unemployment, a struggling economy, and high energy prices. The future of the American economy and American power did not feel at all certain. As a safe haven in times of panic and strife, gold simply reflected that fear. But notice how quickly the buying panic subsided and in fact turned into a selling panic after the emotion had been digested and rationality returned. The all-time peak was immediately followed by two consecutive limit-down days. When emotion subsided, it took the price of gold along with it. This marked the beginning of a 22 year bear market in gold.

Thats why I listen to Dr. Paul, Peter Schiff, Gerald Celente and Marc Faber. They all called it and continue to call it. The only thing they cannot predict is how far the Fed will go to try and fix the problem which we all know drags it out further.