US dollar in 2007 and beyond - my prediction
What is going to happen to the dollar? I think it will continue to fall. It may be falling slower than in the last 5 years, but it will be weakening. A lot depends on China which holds huge amount of dollars as well as US Treasury bonds, and is capable of flooding financial markets with both, further dumping their value. Of course by doing this, China will be shooting itself into foot, but the very thought is quite unsettling.
And did you know that the dollar has lost roughly 30% of its purchasing power since July of 2001, when compared with several foreign currencies? This is staggering, and the big reason has been enormous flow of new paper money in forms of various credits, mortgages, etc. More dollars brought the value down, the same old supply and demand story. Many investors has turned to gold, and many countries are getting out of dollar, switching to euro, pounds and yens.
The trade deficit is huge, floating under $60 billions, but, according to Mr. David Walker, who is the Comptroller of the US, "the U.S. government’s total reported liabilities, net social insurance commitments, and other fiscal exposures continue to grow and now total approximately $50 trillion, representing approximately four times the Nation’s total output (GDP) in fiscal year 2006, up from about $20 trillion, or two times GDP in fiscal year 2000." That is trillions, my friends.
So why would you care? Because it will affect you and your children, and if something drastic isn't done and fast, we will be bankrupt in a hurry. I don't think there are will be many trying to lend us some real money, when we have to stop printing paper dollars.
Are you personally prepared? According to CNNMoney, an average 55 year old worker has only $53,000 in his or her 401k account. Do you realize that these $53,000 will be taxed, when you take them out, leaving you with a puny pocket change? At what rate this money will be taxed by the way no one knows as who is going to stop the government, Republican or Democratic, passing an emergency 401k/IRA tax bill, to fund Social Security or Medicare or what have you?
For those the unconvinced, consider the great city of New Orleans, which has been in ruins, bankrupt, economy destroyed, and can only be rebuilt with outside assistance of Federal government. If the US goes bankrupt, who will help us rebuild? Certainly not China or Russia.
There is a book which one can read, as there are many others. But you have to start somewhere.
Wed Jan 3, 2007 04:01PM | Copyright: www.bad-credit-advisor.com | More in Economy | Comments (0)
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