Is the US Dollar going the way of the … gasp … Dinosaur ???
Indeed, are ALL paper currencies going the way of the … Dinosaur … on a path towards extinction ???
To much less media-fan-fare, but to a FAR greater degree of importance, we suggest that the key thing to understand here is the intensifying secular erosion in the US right to 'seniorage'.
The US right to seniorage … may already be extinct.
Gold is sure suggesting exactly that … that ALL paper currencies are on a long-term secular track towards extinction, including the violent and carnivorous T-Rex of paper currency, the US Dollar.
Should we now call the US currency … the Dino-Dollar ???
Gold is bidding to survive and emerge as the new, fiscally and monetarily 'responsible' currency, an evolution we have tracked and discussed for more than a decade, specifically.
Paper burning, has been a KEY macro-theme for us, going back several decades, and nearly took the crown as the name for our 2006 book, ultimately entitled “Gold Trading Boot Camp” … in which we theorized that the Fed would be forced, by a credit-contraction in US housing, to become irresponsibly easy, monetarily, to avert a debt deflation, to the point of actively and openly pursuing inflation as a policy goal.
The Fed would be forced to burn more, and more, paper.
It has become a policy of paper burning.
It has become a situation that can be defined as a giant bonfire.
That bonfire represents reflation.
The bonfire defines the light, amid a macro-backdrop defined by darkening skies, and intensifying risk of a more pronounced deflation in labor, bank lending, and housing.
Global monetary officialdom is being forced to CONTINUALLY throw paper on the fire … wood in the form of monetary ease, which, with short-term rates at zero, is facilitated via open market purchases of securities, including equities and debt/bonds.
But, the minute officialdom stops throwing paper on the bonfire, it begins to flicker, and fall … spotlighting the reality … that without continuous monetary fuel, the fire will, ultimately, burn OUT, resulting in the darkness that represents a debilitating debt deflation.
If the bonfire burns out, this would signify that deflation at the credit-collateral level, among household balance sheets, and, at the macro-labor level, has become completely dominant.
The risk of the fire burning out is NOT going away any time soon.
In fact, the deflation risk is, right now, intensifying.
This is WHY the Fed, the Bank of Japan, the Bank of England, and the European Central Bank, remain open to the thought that they will be required to provide MORE PAPER, to keep the fire burning !!!!
Global monetary officialdom wants to see that fire RAGING …
Read the full report: "Macro Global - The Dino-Dollar?" (PDF).
Reposted with respect and permission from Weldon Financial - Global macro research & money management
