Anyone willing to bet on a devaluation of the dollar when all the debt bubbles burst?

[Kinser79]

(05-20-2016, 06:54 PM)TnT Wrote: So my fellow Economic Wizards ... what is it? Catastrophic inflation or catastrophic deflation?

A little of both. Currently there is a deflationary trend, but all the imaginary cash created through QEinfinity will eventually have to wash through the economy causing a rise in prices and a devaluation of the dollar. This will probably result in further down grades to US Bond status, once it reaches the general economy. Rising prices of course would largely be the result of inflation as I don't foresee a major shut down of normal production and distribution just yet.

Once US Federal debt has been down graded to BBB status it would effectively be junk bonds, since that is only two steps below the current rating all one has to do is substantially increase the federal debt. Then perhaps the OPEC countries might decide that any other currency is desirable for trading oil and the era of the petrodollar will have effectively ended meaning that the US can no longer export inflation to other countries.

Of course there is nothing stopping them from doing so now. Indeed it is my view that the War in Iraq was primarily caused by Saddam trying to convert some of his oil accounts over to Euro. Granted a silly move given today's news--but we have to remember this was before 2003.