U.S. really has very little choice here. Trash the dollar and we will have .... Pros 1) Eliminate the deficit 2) Force China to re-value their currency unless they want to sit thru the hyper inflation 3) Shrink the trade deficit. 4) Our next generation will start fresh financially. Own little, but also no credibility, need to re-earn that again. Cons 1) Welcome hyper inflation 2) Our paycheck will be cut 3) GDP will shrink directly proportional to how much the dollar shrink. 4) Feel sorry for fix-income folks. I know my social security tax is donated to a lost cause. 5) Super high interest rate. If you thought credit card rates are high now. 6) No such thing as fix interest rate loan anymore since no one is going to lend you dollar. Your last chance will be borrowing in your creditor's currency. IE, just like everybody else. This will force our government to be fiscally responsible. If we don't, here we came 3rd world nations. Welcome IMF. 7) Trade agreement won't be as favorable to us anymore since we are no longer the 900lb gorilla in the world. =================== Alternatively, we can put our head down and payoff the debt, but we all know how good that 60inch LCD flat panel TV looks... So, we just keep sliding down 1 TV at a time, little by little.... so that's not good neither.
From the article: Japan and China led a record withdrawl of foreign funds from the United States [all forms of US investments] in August Old news. Also coincides with the stock market index value decrease.
Things are going to get worse for the dollar, and that worries me. The only thing that could save it is a world war III, history repeats it self. Lets hope we find an alternative before the right wing take the easy way out and draft me to fight the Koreans and Iranians.