The concept borders on weasel-wording. The USD may strengthen against another currency. What it wont and cant do is strengthen against gold. It's a logical impossibility. Something you are creating ad infinitum vs a fixed (slowly growing limited) amount of gold. I'd consider that debunked.
From memory, and I stand to be corrected; "America can always be relied upon to do the right thing......when all else fails"
This is a post that makes sense, I am only talking about this post. Not any other post. Stockmarkets crash, people flee from risk assets to cash, US cash is King still, carry trade of Japanese who exchange yen (cheap interest in Japan) to $A (bigger interest return in Aus) will hit the exits, further collapsing the $A. With silver holding its value better this time round, if price holds in $US, Aust price of silver can go up 40% in matter of weeks as $A depreciates. If China's housing Bubble bursts, that is another story. Australia's "commodity backed" currency will be found out. $US stinks, but remains the best smelling fiat on the cube, during times of duress. Sensibleness is for this post only.
And promptly destroyed through de-leveraging and mass sell-off by investors who flock to the "safe" USD. The problem with "commodity backed" currencies is that they rely on strong commodity prices to be viable for long term investors and carry trades. When the music stops, the currency stops singing
It's what broke and then saved the Argentine economy. If it wasn't for the Chinese paying top prices for Argentinian Soybeans, they'd still be paying off the Falklands war.
Except the logic is flawed. The USD will be printed into oblivion by Bubbles. My brother and I had a long phone conversation last night about investing, the economy, etc. Once again, he wants to check out AU as his exit plan from the US if/when the SHTF. Since he works for Haliburton, he would probably be in demand in AU. I, of course, encourage this type of thinking.
The Argentine problem is that they don't back their currency. They continually spend beyond their revenues. As such, they continually go broke. Their is nothing wrong with a gold backed currency, if the gold backing is not diluted by printing more paper currency. Martin Armstrong argues against a gold back currency, but his currency had no backing and was increased by 5%/year. To me, that sounds like a recipe for disaster. I respect his historical work, but I disagree with his position on not backing currencies. Having gold backing for a currency allows people to maintain confidence in the currency even during inept administrations. And the convertibility of gold maintains fiscal discipline.
I agree with your gold standard position. QE to infinity and beyond. But how does rising commodity prices due to QE have anything to do with the outright sales of tonnage from Aust? Re a China RE bust. (Except for dumping US fiat for hoarding purposes.) Your logic has not factored this. Hence an $A risk analysis will be flawed without this consideration; let alone the Aust govt failing to sterilise $US, and our own clandestine ways of printing the $A, or its equivalents ie lowering interest rates, govt purchasing non-bank bonds for "competitive" reasons, etc. If you think the Aus govt is going to allow the $A to fly away over the $US, I think that will be a very disappointing financial lesson. Furthermore expecting the $A to remain strong based on commodity prices, without factoring in tonnage relative to consideration of a China bust, will be unfortunate. There is a bigger picture to this. It will play out soon enough. If you don't think the $A can depreciate 40% as easily as appreciate 40% from here, get out of forex, for your risk analysis is incomplete. That's just my viewpoint. I see more downside risk for the $A than upside, irrespective of US QE. "I think therefore I stack". Actually "I pray therefore I am led to stack."
would I be correct to say that if the Chinese kept buying US treasuries to keep the yuan low so they can export, would that mean the US will keep getting money and spending it without ever being ableto pay it back with all the money they owe??
The best reply I can think of is In the USA war is business, and business is war. It is easy to pay back any amount of debt in hyperinflated dollars.