Will the dollar really collapse in 2009-2010?

Nice job looking at the budget. You're points are well taken and based on reason. But that's part of the problem. Our Congress is not looking at the budget and the mounting deficits. They aren't using reasonable accounting (as you did) they are just looking at what gets them elected next time around. The lesson they are (erroniously) learning is that they can keep giving away Trillions w/ no consequence. They are wrong, of course. Almost all nations that have piled up huge deficits, backed by fiat currency have collapsed. The collapse of the dollar will happen, if they remain on the present course and that will lead to the collapse of the US, then world economy. It may take decades to recover to something above mere subsistence.
The good thing. It doesn't have to happen. We can still rein in gov't spending and return to being a nation of producers and savers, if we can only get back to a sound money system. I'm hopeful, but the signs are not looking good.

"..shall not be infringed."

... insists the problem is about Iran's desire for nukes! Here is where their real fears lie!

http://www.atimes.com/ati...

http://www.energybulletin...

http://www.energybulletin...

"Whenever I despair, I remember that the way of truth and love has always won. There may be tyrants and murderers, and for a time, they may seem invincible, but in the end, they always fail. Think of it: always"
Gandhi

http://research.stlouisfe...

What took 25 Years (800 Billion), now took just 2 months (+800 Billion).

It is now hyperbolic. And it ain't coming back.

Dream what ever you like.

Hyperinflation is now.

Yes, the debt is serviceable, for now.

But one problem with your math is that we are not paying a 15% interest rate on bonds - it's just that we have so many bonds outstanding that the interest eats up 15% of our remaining $1.73 trillion after SS/Medicare/Medicaid. The real interest rate for long-term bonds has hovered between 2.75 to something over 4 lately.

Two big things you seem to be missing:

1) The base monetary supply has increased by something approaching 40% over the last year. This erodes the value of every dollar and makes bonds into losers strictly in terms of purchasing power - in other words, the $1 million put in bonds 5 years ago now is worth less in purchasing power.

2) The effects of a shift in the global reserve currency. Right now, oil from OPEC, other commodities, debts to IMF and World Bank, etc., are denominated in US dollars and are paid for using US dollars. This accounts for much of the rally of the dollar in the current economic situation, since everyone is trying to get into the reserve currency to buy goods/pay debt. What happens if enough powerful economic players get sick of the effects of #1 above and say "OK, we will now only trade goods in Euros or yuan"? Everyone will get out of the dollar and buy Euros or yuan, and the dollar will sink fast. This situation is HIGHLY likely, but certainly not a done deal.

In the end, I would advise you not to lie awake at night over the doomsday prophecies, but realize that a currency collapse is very possible and, the way we keep spending money we don't have, perhaps likely. Schiff hasn't been wrong too often lately, so I would keep his thoughts in mind.

"Only a virtuous people are capable of freedom. As nations become corrupt and vicious, they have more need of masters." Benjamin Franklin
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against what?

Commodities?...when the U.S. economy collapses and takes the world wide demand with it?

Against other currencies?...when the U.S. economy collapses and takes the world economy with it?

Against gold and silver?...when taxes and over $50 trillion dollars of debt must be paid in U.S. dollars?

Personally, I cannot think of what the dollar might collapse against. But I don't need Republicae's mile long hot air post, so Republicae, please do not reply to me.

Here is a good blurb from wikipedia

In the current scheme of fiat money, the U.S. government is free to print all the money it wants. Consequentially, the government cannot technically go bankrupt as any debtor nation can just issue more money through a practice known as seigniorage.[52]

If there is a gross imbalance between the amount of new money being brought into circulation and the amount of economic goods that are represented by an economy, then there is an unstable situation that can lead to hyperinflation.[53] This has been observed in smaller nations such as Argentina in 1989; the International Monetary Fund and World Bank try to end such crises by working with the problem country to institute sound economic policies and restore faith in the international community that the country can again service its debt with a stable currency.[54]

The interest rate offered on new bond issues is the one that clears the market. On December 13, 2006, the U.S. 30-year treasury note had a rate of 5.375%. Were investors to become concerned about the future value of the US Dollar, they would demand a higher interest rate on US bonds to compensate them for the risk they are assuming.

http://www.ft.com/cms/s/0...

"The current strength of the dollar is temporary and the US currency risks a hard landing in 2009, according to a team of United Nations economists who foresaw a year ago that a US downturn would bring the global economy to a near standstill.

In their annual report on the world economy published on Monday, the economists said the dollar’s sharp rebound this autumn had been driven mainly by a flight to the safety of the international reserve currency as the financial crisis spread beyond the US.

The overall trend remained a downward one, however, reflecting perceptions that the US debt position was approaching unsustainable levels. An accelerated fall of the dollar could bring new turmoil to financial markets.

Investors might renew their flight to safety, though this time away from dollar-denominated assets, thereby forcing the US economy into a hard landing and pulling the global economy into a deeper recession,” the report said.

The UN team said that, as the financial crisis spread beyond the US, there had been a massive shift of global financial assets into US Treasury bills, driving their yields almost to zero and pushing the dollar sharply higher. At the same time, however, the US’s external debt had risen to new heights that could provoke a dollar collapse."

That interest rate goes up when our credit rating gets downgraded. As unemployment goes up, we lose business taxes, income taxes, tariffs, etc... Our ability to service that debt will become impossible short of hyperinflation due to printing money. Debt payments go up, income goes down. Not rocket science. We can't even fund the baby boomers unfunded liabilities in a good economy. They started retiring last January.

Of course no one knows what the future holds, but you make a strikingly different argument than the foaming at the mouth full-on panic coming from our news organizations.
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Truther?
No, sir!
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