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Bud Conrad on the future of the U.S. dollar…
“A new U.S. dollar. It seems to be, with a new promise of some sort, that this time, they won’t really debase it, create inflation that runs out of control, but will keep pushing, an honest time. But it’s what was done in Argentina about six times, in Brazil, in Peru, just everywhere, all the former communist countries, most African countries, we have the second oldest currency in the world. The U.S., Most Americans, don’t realize that it’s normal for a government to get overspent, fall apart, and have to issue new currency.”
Is the economy fixable?
“Our government cannot afford the rise in interest rates that would occur if we got back to normal. We’ve been at zero short-term rate for years. It should be 3 or 4 percent. Longer term rates should be another 3 percent, maybe, above that. A 6 percent rate is sort of the average of what we had post-war. At 6 percent, rather than 1 or 2 percent we’re now at, that’s triple what we now are, our interest payment on our outstanding debt, which is now 16 trillion, but by then will be 20 or 25 trillion, goes to absorb almost all the tax revenue that’s available. It doesn’t work.

Similarly, if you add in the retirement benefit requirements of baby boomers, the expected trajectory of 100 trillion dollars of present value future liabilities on the books, it doesn’t work. This disaster is on track. There is nobody able to take it off track. I don’t see a fix in Washington to austerity or screwing old people. Excuse me for [laughter] making things difficult for older people. I do think that the collapse of currencies worldwide in the next three years is on track.”


The race to the bottom


“It’s absolutely amazing to me that across the planet, the central banks have all agreed they’re in a race to debase. They are trying to decrease the value of their currency, and they say that it’s good for us because it will increase the ability of a country to export, since the cost of manufacturing decreases in competitive world terms when they destroy their own currency. Therefore, there may be some more investment, and people will keep their jobs. But look, that means everybody in the country, where they have most of their assets denominated in that currency, gets poorer, because the currency is worth less! Not only is it being done in the U.S., it’s being done wildly in Europe, it’s being done even more aggressively, and I’d like to talk about Japan, as announced just on Thursday, the idea that you want to destroy your wealth is patently upside-down dumb and insane. Now how they get away with doing this is amazing.”