Capital market collapse A shortage of dollars? (Advice from 2009)

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Hendry brings up some important points that you won't hear very often among the consensus financial media:

1. How is the Euro system going to survive when its members skirt default and can't adjust their economies because the currency they use is not under their control?

2. What happens if the slowdown in the US (China's biggest customer) starts taking down China's economy?

3. How is the world economy going to deal with the shortage of US dollars?

The third question might seem the most outlandish, but if you take away current currency prices (as of 9/27/2010) and some (but not all) commodity markets there is already CLEARLY a shortage of US dollars.

Want proof?

Try to trade real estate for dollars in the US especially California. Florida and Nevada. Try to get yield from US Treasuries. In these massive markets, the dollar is quite scarce (and valuable) in comparison indeed.

How much of the boom in certain commodity prices like gold is the result of hedge funds and big banks seeking short term momentum returns on easy terms money - and what happens when that game is over?

Think long and hard about the US dollar. It may in fact look shabby in the short term and be hopeless in the long term, but if the Euro Zone, China and commodity prices hit the wall, who's going to be the fairest of them all?

Sometimes the winner is the investment that stinks the least and strangely perhaps to those who have thought it all thew way through, while the dollar may be a dead man walking, it may be prove in the next coming years to be the most sought after currency on the planet.

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A shortage of dollars? (Advice from 2009)

The Breakup of the Eurozone

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Hugh Hendry - It's not over yet