If You Are Stressed Now, Just Wait

If You Are Stressed Now, Just Wait – Policymakers Have Created A Perfect Storm.

(Paul Craig Roberts) – Economic news remains focused on banks and housing, while the threat mounts to the US dollar from massive federal budget deficits in fiscal years 2009 and 2010.

Earlier this year the dollar’s exchange value rose against currencies, such as the euro. UK pound, and Swiss franc, against which the dollar had been steadily falling. The dollar’s rise made US policymakers complacent, even though the rise was due to flight from over-leveraged financial instruments and falling stock markets into “safe” Treasuries. Since April, however, the dollar has steadily declined as investors and foreign central banks realize that the massive federal budget deficits are likely to be monetized.

What happens to the dollar will be the key driver of what lies ahead. The likely scenario could be nasty.

America’s trading partners do not have large enough trade surpluses to finance a federal budget deficit swollen to $2 trillion by gratuitous wars, recession, bailouts, and stimulus programs. Moreover, concern over the dollar’s future is causing America’s foreign creditors to seek alternatives to US debt in which to hold their foreign reserves.

SOURCE: DPROGRAM.NET

{ALL THAT IS EVIL WILL BE EXPOSED}