The Collapse of the US Dollar has Begun

I was interviewed for 40 minutes by Stirling Faux of the Howestreet.com / TalkDigitalNetwork.com audio podcast yesterday entitled "The Collapse of the US Dollar has Begun".

You can listen to it here: http://www.talkdigitalnetwork.com/2011/05/begun

Or download the podcast .mp3 directly here: http://www.howestreet.com/audio/Jeff_Berwick_2011_0518.mp3

Topics discussed included:

• Ben Bernanke's recent press conference
• What will occur at the end of QE2 on June 30th - will the Fed continue
• What clues to watch for in regard to the coming collapse of the US dollar
• Don't trust government numbers
• Is the Canadian or Australian dollar a safe place to hide during US dollar collapse?
• When will the euro collapse?
• Why did silver collapse so rapidly on the futures market?
• Is gold or silver in a bubble?

Comments

[Mark C.]

i think the whole point of the Federal Reserve is to conterfit the money that criminals have in there hands, then to redidtribute some of their stolen wealth so everyone else can have a life.

It just because the US debt is out of control does not mean the end of the US dollar. It just menas there is pressure to get back on a Gold or Silver Standard. The time will come ..... but it won't arrive because the US dollar is worhtless. It will come when it does and no earlier IMO>

[Mark C.]

You sound a little crazy in the interview

[Mark C.]

i don' tmean crazy CRAZY, but you are starting to understand what an economist goes through.
Nothing really makes sense.

[Mark C.]

YOU ARE WRONG DOLLAR VIGILANTE AND PEOPLE ARE LAUGHING AT YOU

[Mark C.]

:)

[Mark C.]

Awesome interview dude.

[Rob - @CanadiansInPeru]

Great interview. As I explain to friends, silver isn't really rising, the dollar is tanking and silver simply holds value

[Menta]

The consensus view is that trillions of US dollars have being printed, which must mean US dollar inflation and devaluation, with the US dollar losing its purchasing power. So this means "things" and hard assets will rise in price in US dollars, which of course includes gold.

But that view is based on the false assumption that central banks create money (virtually all of the world's money supply is credit). But central banks can only create the supply of credit, they cannot create the demand for credit. Regardless, central banks will be unable to create credit faster than it can contract (as we clearly saw during the GFC).

Treasury bond yields have actually fallen, despite QEII, as loan demand declines. Credit expansion requires a willingness for banks to lend and for investors to borrow. That is simply not happening in the corporate, small business or housing sectors - regardless of the Fed's best efforts. All QE has done is spur inflationary expectations creating a speculative bubble in commodities. As investors realise that inflation is not the real threat, then the risk-off trade would unwind and the bubble collapse. That's when deflation will become apparent to everyone.

Crucially, with most of the world's debt denominated in US dollars, that's what creditors will demand if credit contracts and liquidity freezes. Debtors would be forced to delever and sell anything to acquire US dollars - including silver & gold. Debt crises in Europe and an unwind of the carry trade and the commodity trade would only escalate the rush to the relative safety of the dollar (again - just as we saw during the GFC). Contrary to popular belief, it's not different this time.