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News Link • Federal Reserve

Karl Denninger: It's Late, Do You Know Where Your Dollars Are Headed?

• Market-ticker.denninger.org/
 
The dollar looks to be headed to 72, historical lows. Bernanke is clearly intending exactly that sort of thing, in an orderly format. What's going on this evening is anything but orderly. If this keeps up by the time Bernanke gets to his meeting the dollar will be lucky if it's not in the 60s, below all historical support levels. Somewhere in here it will come under severe speculative attack. Bernanke thinks he can control this if it happens. He's wrong. I wrote about this in 2007 and said that if it happened - the last time we were down there - it would be a catastrophe. Such an event would cause commodities to shoot the moon on a literal basis and result in massive capital flight of foreign funds out of the United States. This is exactly the sort of trap that can lead a central banker to make the critical mistake of trying to "ease" even more - that is, print his way out. If he makes that error the currency is destroyed and when it implodes the government will go with it, as every citizen's liquid net worth will be rendered value-less overnight, exactly as occurred in Weimar. From that outcome will come the sort of change nobody with any hint of sanity wants. His only other option is to massively withdraw liquidity to support the dollar. That collapses every large bank - overnight. If you think this sort of thing is "under control" you need to take a look in the mirror because you are suffering from severe recto-cranial inversion, and if you don't pull your head out soon you're going wake up with a boot on your neck. Get your arms around this America: Bernanke does not have the situation under control, and control is rapidly being taken over by international speculators who have more money than he does and both can and will force the issue. Remember George Soros and the Bank of England. We're in serious trouble; this sort of instability breeds crashes, and not just in stock markets either. Ps: As I post this in the Yen it's still going..... at some point we'll get intervention - but will it matter? Who knows.... what I do know is that this is definitely not "orderly" by anyone's definition.

1 Comments in Response to

Comment by Don Duncan
Entered on:

"...liquid net worth..."? Come on Jack, why can't you just say: dollars? I read that and at first I thought: Not my liquid net worth.  Ninety % of my net worth is in real money (gold coins) and I consider it "liquid", therefore I was confused. Then I realized you are using the term in a very limited way. 


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