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My long-term view has been, and continues to be, that the U.S. dollar has entered a multi-year bull market. That view is only validated in this environment.
The U.S. dollar is the raw material, or fuel, for risky asset investing around the globe. When people want to target higher returns, they move money offshore to the periphery, to emerging and developing markets of the world that grow the fastest when money and credit are abundant. Thus, think of the dollar as greasing the wheels of financial markets around the globe.
And despite what you hear from so-called gurus, the buck is the world reserve currency; a status that is not in jeopardy. Thus, as sentiment concerning risk taking continues to spiral lower and lower, more and more funds flow back from the periphery to the center where capital markets are deepest. U.S. capital markets are the deepest by far. It's why you see U.S. Treasuries rallying as big pools of money run to hide. So in this deflationary, risk-adverse world, the U.S. dollar is king once again.
The U.S. dollar is the raw material, or fuel, for risky asset investing around the globe. When people want to target higher returns, they move money offshore to the periphery, to emerging and developing markets of the world that grow the fastest when money and credit are abundant. Thus, think of the dollar as greasing the wheels of financial markets around the globe.
And despite what you hear from so-called gurus, the buck is the world reserve currency; a status that is not in jeopardy. Thus, as sentiment concerning risk taking continues to spiral lower and lower, more and more funds flow back from the periphery to the center where capital markets are deepest. U.S. capital markets are the deepest by far. It's why you see U.S. Treasuries rallying as big pools of money run to hide. So in this deflationary, risk-adverse world, the U.S. dollar is king once again.
http://www.marketoracle.co.uk/Article7017.html
Then the Bears:
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The US Economy is accelerating in its decline, certain to produce a recession and huge USGovt deficits. That deficit is likely to at least double and possible quadruple next year. USTreasury Bond issuance cannot conceivably finance all, or at least half, of the commitments. The printing press will do the rest, which will cut down the US$ valuation. The US Dollar decline lies ahead, when the distortions slow or come to an end. Gold will soar on the other side of this liquidation.
An extreme backlash attack is coming against the US Dollar Rising import prices in foreign economies have already caused alarm. Foreigners will soon attack the US$ in a matter of time, using heavy US$-based reserves. Their banking sectors are in disarray, primarily because they are intimately tied to the US$ and USTBonds. The process has begun with Brazil and Mexico in Latin America, to use their strong reserves and sell into this queer US$ strength. That is what reserves are for. The process will spread to other nations.
An extreme backlash attack is coming against the US Dollar Rising import prices in foreign economies have already caused alarm. Foreigners will soon attack the US$ in a matter of time, using heavy US$-based reserves. Their banking sectors are in disarray, primarily because they are intimately tied to the US$ and USTBonds. The process has begun with Brazil and Mexico in Latin America, to use their strong reserves and sell into this queer US$ strength. That is what reserves are for. The process will spread to other nations.
http://www.marketoracle.co.uk/Article6942.html
So here we have two arguments.
One has at its base the USD as the world's reserve currency, a status which it says is not threatened.
The other says that the USG is basically insolvent and that de facto default on its debt will be the death of the greenback.
Here is what the Bear says:
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A ‘Post-US World' is being planned, and Americans are the last to know. Entire new barter systems between a key pair of nations is about to be launched. Regional bond and commodity organizations are being formed, with exclusion of the US. The US press reports nothing on these important developments.
Foreign creditors will form new committees, which will be recognized in time as the Receivership Committee. Foreigners are watching in horror. Decisions have already been made, with Americans the last to know. In order to arrest the cancer they so clearly see, they are ready to force a complete upheaval. The US Dollar will lose its global currency status, a thoroughly abused privilege. The above lack of disclosure only reinforces their motive to take action. They will move when they must, upon a system failure, or when they are challenged, or when flimsy attempts by debtors are made to dictate reform.
Foreign creditors will form new committees, which will be recognized in time as the Receivership Committee. Foreigners are watching in horror. Decisions have already been made, with Americans the last to know. In order to arrest the cancer they so clearly see, they are ready to force a complete upheaval. The US Dollar will lose its global currency status, a thoroughly abused privilege. The above lack of disclosure only reinforces their motive to take action. They will move when they must, upon a system failure, or when they are challenged, or when flimsy attempts by debtors are made to dictate reform.
Thoughts?