Wednesday, January 26, 2005

The Next Great Depression Is Right Around The Corner.

What happens when you produce too little and borrow too much? You crash. China and Japan has been buying massive amounts of US bonds in order to let us borrow from them in order to buy their goods. Central Banks are cutting back on their dollar holdings an replacing them with the more stable euro. OPEC has cut it’s dollars holdings from 75% to 61.5% in the last three years. What happens when the dollar is no longer wanted by anyone? It becomes worthless. That means everything we consume will be become more expensive. In order to make the dollar investments more appealing to foreign investment interest rates have to raise, some predict as high as double digits. That will cause US real estate’s bubble to burst, with too many foreclosing. This can happen at any time, so if you were planning on a trip to London or Paris, do it now.


Post a Comment

<< Home