Oct 5, 2009
Thinking about the US economy
Was wondering about the following scenario at the weekend:
- The USA has fueled the global economy.
- Arguably they’ve over-cooked it. Let’s say by a factor of 2:1? That is, their liabilities for the next 15 years are $60 trillion (TARP, Medicare, etc), but their growth/inflation could only produce around $30 trillion.
- The Fed realise they can no longer control this using the USD alone, because the market will rebel.
- So they expand membership to G20, and quietly appoint the IMF as a global central bank.
- The IMF starts issuing (aka printing) SDRs at a USD friendly rate, and the US can quietly devalue their currency the required 50% to pay off their problems
Given the inverse relationship between gold & USD, I guess that means that gold is still a ‘buy’ at $1000. I wonder if it’s possible to short the USD? I really struggle to understand how people can speculate on a game where the fundamental rules change.
