Real Wealth Society

Saturday, June 10, 2006

Will Demise of Dollar Usher in Free Money? By Sepp Hasslberger

The imminent demise of the US dollar as the kingpin of economic transactions world wide is predicted by several commentators. Johnny 'Silver Bear' comments that the Federal Reserve has kept the printing presses rolling too liberally for too long and he continues:
"The Fed has lost control of the dollar. Their mindless creation of credit has insured a mind-boggling meltdown of the entire financial system. This is not a good thing for anyone, anywhere. The dollar is the world's reserve currency. Seventy-five percent of all dollars in existence are in foreign hands. Whatever their value was when those foreigners got them, that value is evaporating right before their eyes. It's like buying ice by the pound and watching it melt away before you have time to use it."

Like Silver Bear, others say the dollar is doomed and they advocate a return to the time before 1971, when Nixon was forced by the French, who insisted on being paid in gold for dollars, to end the direct convertibility of the dollar at a fixed price. The advocates of precious metal as currency say that a return to the old gold standard would prevent the Fed from creating "funny money", the cause of runaway inflation. What they overlook is that their cure might be worse than the disease.

To be continued at:


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