Wednesday, May 18, 2011

Time to Get Real

Either we can face the music on the national debt now, or we can face it later:

What would happen if the Dollar were no longer the world reserve currency? The debates we are having over raising the national debt limit would be useless, because without that special status the U.S. would go immediately into de jure default. Whether the Dollar maintains that special position is really up to the countries who use it as such, the biggest of which is China. The Chinese are already buying fewer dollars, and other nations are looking into the possibility of using another reserve currency-even creating one if need be. Either we face the music now and get our fiscal house in order, literally by default, or we have a much bigger default and crash later, making the Irish situation look like a cakewalk.

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