Monday, November 16, 2009

The Grand Wobble! Part 2

We are getting closer to the point when another Black Swan event, perhaps The Black Swan event in our ongoing period of extraordinary financial and economic distress, comes to the fore. Specifically, I have in mind a very large, flapping, black bird that stirs up a commotion so great as to cause a Weimar like currency cascade. The idea that such a collapse could occur at all, let alone imminently, is not exactly on the vast majority's radar. Would that it were, since the nation's GDP, its marginal capacity of debt, as well as the all important issue of confidence, at least where a fiat currency like the dollar is concerned, are in a most precarious position. Last but not least, the dollar's reserve currency status, perhaps the strongest force heretofore working against a currency collapse, is clearly being dislodged, and none too delicately or slowly, from its pride of place.

My how the times can change, and quickly too, as history shows.

The mendacious head of The Federal Reserve, in front of legislators for his regularly scheduled period of restrained questioning and (non) answering, has asserted that he supports a strong dollar policy. Unfortunately, no one in our august legislative body, including the well meaning but feckless Ron Paul, managed to take Mr. Bernanke to task for his brazen dishonesty. However, the market will not fail to call The Fed Chairman's bluff, even as lawmakers don't, and do not be surprised if the merciless and enormous forex market does so in a spectacularly swift and frightening fashion as befitting a Black Swan of Black Swans.

After all, what, besides paying lip service to a strong dollar, has Bernanke, or anyone else in a position to effect the situation, done? The silence from Helicopter Ben's quarter were he compelled to answer such a question, would, by necessity, be as deafening as it was revealing. In truth, Ben, and our Legislative and Executive branches, under both The Shrub and The Anointed One, have done absolutely nothing but sow the seeds for a total destruction in the purchasing power of the dollar. And, as we are getting perilously close to technical levels in the dollar that equate to a
Do or Die situation for the greenback, one must be vigilant for the onslaught of a free fall that gathers steam as the realization that, not only is Quantitative Easing here to stay, but is apt to be expanded with gusto.

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