Banks Collapse = Strong dollar

Discussion in 'Economics' started by Acumen, Sep 16, 2008.

  1. Acumen


    Billions of USD disappearing overnight. No?
  2. vv111y


    good question
  3. only if you look in your bank account one day and find that your 10k in savings, your 50k CD and your 25k in your checking account "magically" disappeared.

    Then yeah, We would have a really strong dollar.
  4. Acumen


    By not being around to extend loans they reduce the money supply... Intermediation has every dollar owned by something like 4 people.
  5. purple

    I dont mean to highjack your thread but people dont understand where it all began. The end is not going to be good because people dont understand whats happening.
  6. Why is no one mentioning that just before 1987's Market crash, the USD rallied after falling significantly during that period?

    Similar isn't it?
  7. Rickb


    Credit defaults cause elimination of capital in a fractional reserve system - which makes money supply decrease, which should make dollar go up.

    Treasury has not yet offset this decrease ENOUGH with injections/printing YET, to stop deflation. I know, hard to beleive, but I think it is true.

    Gold rise (today) in response to banks defaulting fear, not so much inflation, Yet. Rember, gold does well in both inflation, and deflation (during bank trouble).

    On the fence, but I see deflation, until gigantic injections by Fed (way more than they are already doing before they overcome defaltion) - key is to understanding the HUGE loss of credit and writedown in assets (Real Estate, stock market, commodities) that is much more than is being added.

    ....I think.