Goldbug blog writers and many others have a very bleak view of the future for the U.S. Dollar. I agree that the dilution taking place will end up with inflationary trends, but I don’t think the dollar will go to near zero value. All fiat currencies go that rout eventually but the U.S. Dollar has some life left.
Our banking and financial systems are in peril. The Apollo 13 mission comes to mind. The Financial Systems have sent themselves on a space mission of risk that has suddenly become a life or death crisis. Henry Paulson is like the Ed Harris character in the movie, trying everything possible to save the guys. This last move to create a Resolution Trust may result in a happy ending.
The investment banks and even many deposit banks have been like a group of guilty prisoners lined up to be executed by a small firing squad of short sellers. It was taking a while to kill the prisoners but they would have all ended up dead eventually and the free market cheerleaders were sadly but earnestly saying amen for each casualty. The U.S. Government, Federal Reserve, Central Banks etc. are saying, wait a minute we will pardon that group lined up for execution and make the firing squad throw down their weapons for 10 days.
If this measure works all the prisoners will have had a chance to run to safety but if it does not, the firing resumes on sitting targets.
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