Normally, telling the future is something I leave to fortune tellers with crystal balls and such but in the case of the Dollar no crystal ball is required.
The dollar has nowhere to go but down. Over the past 7 years its down 58% to the Euro. Over the next 7 years it will decline by an even larger percentage. The dollar has no future.
Why? Easy: Folks say the US is no longer a manufacturing center. Thats incorrect. The US today leads the world by a huge margin in manufacturing our number 1 product to the world: debt. Today, total US debt equals 340% of GDP. This is up from 270% in 2000. The last time the US had debt levels like this was at the height of the Great Depression (just above 250%). This includes personal debt, corporate debt and Govt. debt. Whether it be Treasury Bonds, Corporate Bonds, Mortgage Backed Securities, or any number of "Derivatives" (what Warren Buffet calls "Financial Weapons of Mass Destruction") the US is manufacturing tens of Trillions in debt.
We have real Govt. deficits approaching a Trillion $$$ per year. (pay no attention to the CBO deficit figures, they are based on accounting practices that would land you or I in prison. Instead look at the numbers from the Comptroller Generals office which audits the US Govt.s books
to General Accounting Standards). We have a national debt over $9 Trillion. Worst of all we have locked in entitlement commitments that over the next 30 years will yield funding
shortfalls (and thus additional debt) of over $35 Trillion. THIS is really the core
issue. There is simply no way the US Govt. can fund its looming entitlement commitments without incurring additional debt on a level that ensures the destruction of the dollar.
Regardless of short term Fed actions relative to interest rates the bigger issue is the long term Fed liquidity actions. Since 1995 the overall money supply has tripled. This is a key reason why inflation is such a Fed fear.
Any way you cut it, US debt levels and future Govt. debt requirements are going to yield huge increases in outstanding debt. This will continue to yield a ballooning money supply which will yield inflation. In the not so distant future, the amount of new and refunding debt the US will demand is going to exceed the entire planets excess savings rate. This will occur within the next 15 years as baby boomer entitlement demands peak.
At some point, the Fed will begin directly purchasing
Treasury debt at auction
. There will be no other choice if Federal obligations are to be met. This will in effect be monetizing the debt and the result will be hyperinflation and the ultimate destruction of our monetary system.
This kind of scenario isn't a far fetched question of "IF" its going to happen. It is. There is no way around it. Forget about this politician or that politician.... there is nothing any politician can do about this issue at this point. We are past the point of no return. The only question is the timing.
So if your holding dollars and your liquid at all you need to move your money into a safer foreign currency. The Yen looks good right now as do Swiss Francs. Check out Everbank.com for ways of depositing funds in a foreign currency.
Another idea that may have some merit would be to purchase
a nice used boat
here, sail it to the Med and sell it for Euros. Then the dollar trade could work