January 19, 2011 at 6:34 PM
The U.S. dollar is down another half of one percent today. And I’m no technical analyst by any means, but if I was I would say that it is in the process of putting in a head and shoulders top. Maybe the reason is because congress must once again raise the debt ceiling or face an imminent outright default on Treasury debt—which eventually will probably happen anyway.
Or maybe it’s because China is no longer comfortable holding our dollar denominated assets to the proportion we have become accustom. Then again, it may be simply that global investors have finally had the epiphany that the U.S. must monetize most of the $14 trillion national debt that is growing by well over a trillion dollars per annum.
Here’s White House Chief Economic Advisor Austan Goolsbee had to say about our precarious debt situation: “This is not a game. You know, the debt ceiling is not something to toy with. … If we hit the debt ceiling, that’s essentially defaulting on our obligations, which is totally unprecedented in American history. The impact on the economy would be catastrophic. I mean, that would be a worse financial economic crisis than anything we saw in 2008.”
Precisely Mr. Goolsbee! However, we eventually may default on the debt because the U.S. will shortly be using most of its revenue just to service the debt…so you can forget about paying it down. And we know from history that monetization just doesn’t work. However, it is unfortunately, always attempted first.