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the leveraging of the us dollar

  1. 601 Posts.
    The note below was taken from The Privateer and is sobering stuff on the US dollar. Long term gold holders may find this interesting

    The US Is Still Grossly OVER Leveraged:
    The most recent US flow of funds data, straight from the Fed itself, shows that total US credit market debt
    is $US 51 TRILLION versus a $US 14.3 TRILLION US GDP. US debt as a percentage of US GDP is
    now 356 percent versus 260 percent during the great 1930s Depression. This bluntly shows that even to
    get the US debt/GDP leverage ratio back to the peak it was at during the Great Depression would require
    another $US 14-15 TRILLION in present US debts being cleared off the field. To take the US debt/GDP
    leverage back into saner historical territory would take yet another $US 14-15 TRILLION on top of that.
    A US repayment or write-down of debts to say $US 20 TRILLION (still much higher than US GDP)
    would require the elimination of $US 31 TRILLION of the present US debt overhang. Economically, that
    can only happen in principle in two ways. There is the honest way where debts are paid back over a
    period of time. Then there is the dishonest way where debt is either defaulted on by the borrowers or is
    inflated away by repaying debts in money of drastically diminished purchasing power. To go the “inflatethe-
    debt-away” route points straight towards a future US Dollar that has only 20-25 percent of the
    purchasing power of the present US Dollar. To go the “default-the-debt” route means a deflationary
    crash. The Fed is aiming to inflate the debt away but it might be overtaken by the credit crash.
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