Jim Rogers & Marc Faber Agree, Bombs Away

By Dominique de Kevelioc de Bailleul

Investors waiting for an official announcement of another round of Fed balance sheet expansion may be losing ground in the next leg up in precious metals prices—and in oil and other commodities prices.

Don’t wait for the shot to be heard.  Place your favorite dollar-destruction trade now before the mom-and-pop investor as well as the institutional money manager catches on to the next stage of deceptive practices of the Fed.

There’s no alternative to more money ‘printing’, according to Jim Rogers of Rogers Holdings and Marc Faber of Marc Faber Limited.

In the case of Rogers, he says the Fed desperately wants to avoid more “egg on their face” after two QE mistakes, while both men lead the publicly stated  comparison between Bernanke and his lead neo-Keynesian cheerleader Paul Krugman with France’s 18th century John Law.

“I do not know whether they will announce it [QE3] or not. They are a little bit embarrassed because they announced QE1 and QE2, and it did not work. So they may try to discuss it,” Rogers told the Economic Times.

“They may just continue to do it without getting egg on their face again, but they are going to print money, they are all going to print money,” he adds.  “It is the wrong thing to do, but that is all they know to do.”

Once a complimentary Fed policy tool for orchestrating global money flows, the coordinated actions to manipulate interest rates and issue communiques have now become a huge liability for Bernanke.

It’s now become apparent that $2.1 trillion of officially-disclosed money creation since the onset of QE1 in Dec. 2008 has not delivered that reliable Keynesian magic as hoped.  Instead, much of that fiat merely spilled over into the commodities and precious metals markets, in addition to propping up insolvent banks and U.S. stock markets.

As the monetary base expands while real GDP contracts, the Fed must now downplay the evidence of monetization from the layman the best it can.  Otherwise, the Fed becomes completely irrelevant to harnessing the market from the superhighway of hyperinflation.

“If you look at their balance sheets, you will see that something is happening, assets are building on their balance sheets and they are not coming from the tooth fairy,” says Rogers.

Early last week, Rogers told The Daily Telegraph that Bernanke & Company “probably have learned how to do things off balance sheet.  I have nothing to confirm this, but everyone else has learned how, so they probably have, too. This is just a comment on human nature.”

The Swiss money manager Marc Faber agrees with Rogers’ on the outlook for the Fed’s money printing activities in the wake of $1.5 trillion U.S. budget deficits—along with no plan in sight to drastically cut military and ‘entitlement’ programs.

With more wars on the horizon and an American political class comprised of two parties rolled into one oligarchy in bed with bankers, Washington’s will to alter the course of runaway consumer prices through the destruction of the U.S. dollar’s purchasing power is clear—and was made most clear to those paying attention to a failed Ron Paul presidential campaign and a Simpson-Bowles impasse.

“In my opinion, as far as the eye can see, the Federal Reserve will never again implement tight monetary policies,” say Faber to a gathering at the Mises Institute.  They will print and print and print.”

Faber goes on to say that the neo-Keynesians don’t acknowledge that excessive leverage and levels of debt in the financial system are the root cause of the four-year-long global recession, pointing out an eight-page dissertation by economist Paul Krugman published by the NYTimes.

In Krugman’s article, not one mention of the problem of an over-leveraged banking system and excessively indebted economy was made,  lead Faber to believe that the implication is: more of the same monetary drug is recommended.

“They cannot afford to have a debt deflation in a credit addicted economy,” Faber continues.

Thousands of years of monetary history show that the road to hyperinflation is political driven, with no politician or central banker (in the case of today’s monetary system) desiring to be in the driver’s seat when the system crashes from its own weight.  Each elected and appointed policymaker knows that the ramifications of hyperinflation include civil unrest, violence and revolution—either peaceful, or not.  The targets will be on their backs.

“I tell you, sovereign credit in the Western world, they’re all bankrupt,” states Faber.  “But before they officially go bankrupt and can’t pay, they’re going to print money and massively so.  That should be very clear.  That’s the easiest way politically to postpone the hour of truth.”

Americans may fear the truth, but they haven’t experience the pain that goes with that truth—a la Greece, Spain and Italy, to mention a few.  As the market for Spanish and Italian sovereign debt now soars along with precious metals, the markets agree with Rogers and Faber: there’s virtually no turning back for the Fed and its complicit partners in monetary crimes, the ECB, BOJ, BOE and SNB.

Imminent Silver Price Explosion!

By Dominique de Kevelioc de Bailleul

Silver has perked its head up and sniffed the next round to hyperinflation is on the way.  Load up the truck; it’s expected to be the best ride, yet.  Here’s why:

No less than three articles penned by well-placed journalists at the ‘establishment’ rags of the Wall Street Journal, Financial Times and the Economist were launched within days of each other, with all three ‘suggesting’ that Bernanke better start stirring-up the animal spirits—on the pronto!

Jon Hilsenrath of the Wall Street Journal, the man who the straight-shooting Stephen Roach of Morgan Stanley calls the real chairman of the Fed, wrote Wednesday, following the dismal U.S. GDP report:

A few quick thoughts on GDP report out this morning:

Key price indexes are uniformly running below the Federal Reserve’s 2% objective. The personal consumption expenditures price index was up 1.6% from a year ago, thanks in part to falling gasoline prices. This is the price index that the Fed watches most closely, more so than the consumer price index produced by the Labor Department, which is running a touch higher. Excluding food and energy, the PCE price index was up 1.8% from a year ago. The Fed watches this ex-food-and-energy index to get a read on underlying inflation trends. For the quarter at an annual rate, the PCE price index ran at 0.7% and excluding food and energy it ran at 1.8%. An alternate measure, the “market-based” price index, is also running below 2%. This is ammunition for Fed officials who want to act right away to spur growth. Not only is growth subpar, and the job market stuck in the mud, inflation is also running below the Fed’s long-run goals.

Final sales of domestic product — a measure of how the economy is doing when you take out inventory swings – up at a 1.2% rate in Q2 and averaging a 1.7% rate since 2011. That’s really substandard for a recovery.

That’s the first polite salvo at Bernanke.

Now from Greg Ip of the Economist.  Ip is Europe’s version of Wall Street Journal’s Hilsenrath, but it’s all the same as far as the American-European central bank alliance is concerned, with the Depression of 1873-79, the banking crisis of 1907, the brief but deep Depression of 1921, and the Depression of 1930-1945 to serve as stark reminders that the two economies are inexorably tied at the hip.

Ip piece for the Economist was written with the point of view of an article he would write in 2021, looking back at monetary policy of 2012.  A blog entry about Ip’s piece can be found at Zerohedge.com.

In the fall of 2012, Greece abrogated its bail-out agreement with the IMF, European Union and ECB, declared a moratorium on all external debt payments, and began paying domestic bills with IOUs that it then declared legal tender. The ECB cut off Greece’s banks, Greece responded with capital controls, and relabeled its IOUs “new drachmas” which quickly plunged to 35 euro cents. Bank runs immediately commenced throughout the periphery; bond yields in Spain shot over 7%; global stock markets cratered.

The ECB was finally forced to act to save the euro: it announced it would buy as many bonds as necessary to cap all sovereign yields at 6%, with the exception of Greece. The ECB never had to buy any bonds: investors no longer had any reason to sell since the ECB had taken insolvency off the table.

Days later, the ECB president destroyed the euro shorts during a press conference.

“Within our mandate, the ECB is ready to do whatever it takes to preserve the euro,” ECB President Mario Draghi told reports last week.  “And believe me, it will be enough.”

UBS’s Art Cashin commented on Draghi’s surprise market-moving jawbone antic:

“Mario Draghi’s comments stunned the markets,” stated Cashin.  “What prompted the timing of his move?”

Referring back to Ip’s article, Cashin continued, “Wait a minute! That [article] sounds rather close to what Mr. Draghi was discussing. Coincidence? Probably, but the timing is stunning. Somewhat like the simultaneous but separate development of calculus by Isaac Newton and Gottfried Leibniz in the early 1600′s.”

Unlike Morgan Stanley Roach’s direct style, Cashin’s more-diplomatic observation nonetheless delivers the point.

And to complete the shock-and-awe three-man series of salvos from the mouthpieces of the ‘establishment’, Council on Foreign Relations commissar Sebastian Mallaby of Financial Times wrote Tuesday:

 . . . the Fed could couple more quantitative easing with a formal announcement of a higher inflation target.  Some Fed leaders are open to this. Charles Evans, the Chicago Fed president, has floated the idea of a 3 per cent target, effective until unemployment falls below 7 per cent. A higher inflation target would lead markets to understand the Fed is committed to quantitative easing of game-changing magnitude, inducing the behavioural shifts needed to make the policy succeed.

The Bernanke Fed has been pilloried for pursuing wild quantitative easing at the risk of inflation. The truth is that it has pursued cautious quantitative easing without risking inflation. The time has come for some fresh thinking. A Fed that can escape the myth of its audacity might be able to do more.

Inflation isn’t a problem, according to Mallaby, though ShadowStat’s John Williams’ reconstruction of M2 reveals a 15 percent growth rate doesn’t quite jibe with Mallaby’s neoclassical assertion.

And according to Williams, further money printing is, not only expected by the Fed, it will lead to hyperinflation by the end of 2014.

Not too surprisingly, no one really expected central banks to repeat a Wiemar scenario so quickly, including Williams, who, after witnessing central bankers unleash the printing presses following the aftermath of the collapse of Lehman, pushed up his forecast for toilet paper money to 2014, from 2019-20.

And the conclusion that can be drawn from all of that jibber-jabber from the ‘establishment’s’ prestitutes?

FX Concepts’ currency expert extraordinaire John Taylor told Bloomberg News Monday, “I think something’s going to happen on Tuesday, Wednesday, obviously reported Wednesday,” referring to the FOMC meeting this week.  “And mostly likely it’s going to be Bernanke teasing us a little bit, you know, that QE is coming.”

“September it’s [a formal announcement of more QE] coming,” Taylor said.

UBS: Hyperinflation Nears; Gold, the Canary in the Coalmine

By Dominique de Kevelioc de Bailleul

Swiss-based UBS AG issued a warning to clients Wednesday that the U.S. is on the path of a hyper-inflationary depression.  Forty years of a nation’s currency not redeemable for a physical asset has just about reached its limit of usefulness, according to the world’s 17th largest bank (ranked by assets) and its economist Caesar Lack, Ph.D. economist.

In Lack’s note to investors, titled, Global Risk Watch: Hyperinflation Revisited, he states:

Hyperinflation: Paper money only has a value because of the confidence that the money can be exchanged for a certain quantity of goods or services in the future. If this confidence is eroded, hyperinflation becomes a threat. If holders of cash start to question the future purchasing power of the currency and switch into real assets, asset prices start to rise and the purchasing power of money starts to fall. Other cash holders may realize the falling purchasing power of their money and join the exit from paper into real assets. When this self-reinforcing cycle turns into a panic, we have hyperinflation. The classic examples of hyperinflation are Germany in the 1920s, Hungary after the Second World War, and Zimbabwe, where hyperinflation ended in 2009. Indeed, hyperinflation is not that rare at all. Economist Peter Bernholz has identified no fewer than 28 cases of hyperinflation in the 20th century. [emphasis added]

Lack’s overview of the events which lead up to a currency collapse comes straight from the work of Austrian economist Ludwig von Mises (1881-1973), an economist shunned by the establishment’s money masters for his heretical economic viewpoints, and scoffed by today’s confused legion of ‘expert’ economists, media personalities and political figures such as deficits-don’t-matter Dick Cheney.

Americans will soon find out that deficits, indeed, do matter, says UBS.

Just as a student pilot is told to trust his flight indicators and not the sensations brought about by his inner ear, the readings of hyperinflation stare each investor in the face—if he’s trained to ignore the likes of the establishment’s head cheerleader Paul Krugman, and, instead, interpret what the economic indicators tell him from the standpoint of the obscured von Mises.

As von Mises pointed out, hyperinflation is not a result of a money supply gone wild through the excessive printing of paper notes, per se; it’s the result of a marketplace of participants suddenly rushing out of a monetary system which they perceive no longer works or can be trusted.  MF Global, PFG, LIBORgate and, now, hints of fraudulently managed ‘allocated’ gold accounts surfacing, all contribute to that cumulative, then sudden drop in confidence in the U.S. dollar.

As repeated attempts to audit the Fed regain renewed support in Congress, policymakers are under pressure by a public—a public that now questions the once-sacred, enigmatic and arcane central bank’s role as the steward of the nation’s money.  As congressman Ron Paul stated in an interview with GoldSeek radio during the weekend, another bill to audit the Fed makes its way through committee.  The issue has mushroomed in popularity with constituents, therefore their representatives, and can no longer be ignored, according to Paul.  The issue of the Fed won’t go away.

And the last step toward hyperinflation comes from a public that comes to realize that, in fact, deficits do matter and that four decades of deficit spending has reached its limit in the U.S.  The realization of American exceptionalism, as it relates to matters of fiscal responsibility, was just another propagated myth could come as early as next year, according to many students of the Austrian-school, such as Jim Rogers, Marc Faber, John Williams, Peter Schiff, Max Keiser, James Turk, Eric Sprott, among others.  As the U.S. economy rolls over, federal tax receipts will drop further, gaping an already monstrous $1.5 trillion deficit ($5.3 trillion, including unfunded liabilities) into a Greece-like death spiral.

“Ultimately, hyperinflation is a fiscal phenomenon; that is, hyperinflation results from unsustainable fiscal deficits,” states UBS.  “Peter Bernholz [author of Monetary Regimes and Inflation: History, Economic and Political Relationships]

notes that historically, cases of hyperinflation have been preceded by the central bank monetizing a significant proportion of the government deficit.

“After investigating 29 hyperinflationary episodes, 28 of which happened in the 20th century, Bernholz writes: ‘We draw the conclusion that the creation of money to finance a public budget deficit has been the reason for hyperinflation.’”

Reruns of Cheney video clips will be used by some as a reminder of how fiscally, politically and morally bankrupt American culture has become.  It will dawn on a larger and more meaningful portion of Americans that the promise of a trip on the train to the American dream was really the boxcar to the slaughterhouse.

That flashpoint worries the Fed and the oligarchy (witness the Warren Buffett, Charlie Munger and Bill Gates interviews with CNBC’s Becky Quick), as confidence in American institutions will be irredeemably lost, leading eventually to that fateful day of hyperinflation.  Just as 28 other currencies before, another currency, the dollar, will end up as the next worthless fiat.

The bizarre series of Executive Orders and other unconstitutional steps taken by all branches of government since 9-11 tip the hand that central planners have  been preparing for that day of awakening.  The anger generated by a public armed to the teeth most likely will trigger panic and another American Revolution.

UBS ends with:

Gold – the canary in the coalmine

Due to its long standing as the foremost, non-inflatable, liquid alternative currency, gold is the first destination for wealth fleeing from paper money into real assets. Gold can be considered a hyperinflation hedge, and its price can be considered an indicator for the probability of hyperinflation. A sudden rise in the price of gold would be a warning sign that the risk of hyperinflation is increasing, in particular if it went along with a worsening of the fiscal situation in the deficit countries and an easing of monetary policy. Not only gold, but also other commodities, as well as the stock market, would profit from investors fleeing from money and from government debt. Thus a strong rise of gold, commodities, and stock markets, accompanied by a fall in the currency and in government bond prices (i.e. a rise in yields) could signal the approach of hyperinflation. We will continue to monitor global inflation developments and change our risk assessment in the global inflation monitor according to current events.

Jon Nadler, Another Fed Whore

By Dominique de Kevelioc de Bailleul

If there’s an interview that almost proves beyond a shadow of a doubt that Kitco’s Jon Nadler has an agenda outside the interests of the American investor, the Jun. 22 interview on Bloomberg with Tom Keene serves as strong evidence.  It’s a remarkable demonstration of complete ignorance, or worse.

Keene asked Nadler, what is the ‘natural value’ of gold?  Whatever ‘natural value’ means.

“If we didn’t have the melange of easy monetary policy from the Fed, the aggressive dehedging of the world’s mines and, of course, the advent of gold-oriented ETFs and the hedge fund speculators that instrument brought to the marketplace since about 2005,” Nadler began his interview in his typical affected speech, “my opinion is that we would probably be muddling along somewhere in the $860 area.  And that’s fair value currently in gold,” Nader continued, throwing in the word, “melange” to give his presentation a bit of James Grant gloss, simialr to Dennis Gartman’s affected speech.

“I think $1,200-$1,300 could be in the cards [for the price of gold] inside less than a year,” he speculated.

Instead of Wall Street’s lackey Keene challenging Nadler by saying, “Well, Jon, why are mining companies dehedging?  Isn’t it logical for investors to hedge against negative real rates?  How do you derive at ‘fair value’ of gold at $860?  Since, you’ve been wrong about the direction of gold for so many years, why did my producer ask you onto the program?”

And it’s gets better.  Nadler tried to paint the picture that everyone was expecting hyperinflation after the Fed embarked on QEI and QEII.

“Another interesting chart I noticed in you interview of Mr. Bullard was this great disinflation since we’ve had in place since 2009,” Nadler revealed his love of Fed statistics.  “You know, that’s a long-term process of deleveraging and you know an adjustment back to norm, which, albeit, with some interruption, has really disproved the case for this advent of this Zimbabwe on the shores of the Hudson.  And I think that is also playing into this equation to some degree, because after QEI and QEII, we still haven’t had this hyperinflation that everybody was convinced would result.

Firstly, Nadler has to tighten up his sloppy language when using the word, “everybody”.

Secondly, if he was listening carefully to economists who don’t whore for the Fed, such as Mr. Bullard, he would have noticed that most credible analysts of the gold community (independent analysis) said the Fed has embarked into the process of hyperinflation, and that, hyperinflation is not a monetary event, it’s a political one.  Read a little von Mises for a primer on the subject of hyperinflation, Jon!

Moreover, the process of triggering an eventual panic out of a currency, as von Mises explained so diligently, through, in this case, the Fed’s debt monetizing plan (which it hides through its primary dealer network), can take some time as the global community finally loses confidence in the U.S. dollar as a viable store of value.  Psychologically, the global investor is presently at the stage which precedes a complete loss of confidence in the U.S. dollar; that is, the fear-of-losing-principal stage.  Seeking a store of value from currency debasement years comes next.

von Mises called the process to hyperinflation, the Crack-up Boom, whereby there is a period of ‘disinflation’ as the financial system ‘deleverages’, then followed by a period of awareness, a tipping point, that debt obligations cannot ever be repaid.  Then, the fight against the Kondratiev Winter by central banks begins in earnest through hyper-inflating the currency into oblivion after the markets reprice debt to reflect erosion of purchasing power and default risk, such as the case with Greece, and now Spain and Italy.

In fact, according to the economist many ‘gold bugs’ follow to yardstick the Crack-Up Boom process is John Williams of ShadowStats. Williams has recently move up his hyperinflation scenario to some time in 2014, from his original estimate of the end of the decade.  So who is Nadler taking of when he says ‘everyone’ expected hyperinflation during QEII?

Keene asked, “What do the gold bugs have wrong, Jon?  I mean, are they trying to relive those early 80s?”

“In part, I’m afraid that’s exactly what they’re trying to relive,” Nadler said with a chuckle.

He added, “But I think the other part they have wrong is that they believe the Fed is some how going to take its hand off the steering wheel, lose control, and careen into the hyperinflation ditch.  And I think we’ve had proof enough, with all the criticism that we can level at the Fed, one thing they’re cognizant of is what happens when they don’t watch the brake pedal.”

Ha?  Does Nadler have some advice for the Fed as to when to apply that proverbial brake? So far, the Fed has stated in it FOMC statements that the brake won’t be touched until 2014, at the earliest.  And of course, the Fed is aware of what could happen if it doesn’t apply the brake.  The question is, Jon, how can the Fed apply the brake without soaring carrying costs of $15.2 trillion of federal debt (not to mention state and local interest costs) without entering into a Greece-like fiscal debt spiral?

Nadler really come across sounding as silly as Warren Buffett, Charlie Munger and Bill Gates have.

The last crazy analysis by Nadler comes from his response from Keene’s question regarding the idea proposed by the EU of a gold-backed version of an ESF.  Nadler said it would end up being a “double-edge sword” for the gold price, with the initial plan being bullish for gold as central banks would highlight to the world that gold has no counter-party risk.   But in the end, according to Nadler, it would be bad for the price of gold in the event of default.   The gold backing the lending scheme would end up being dumped into the market, therefore depressing the price.  A sophomoric analysis, at the very least, and at the most, proof that Nadler is completely full of bull—a whore for the Fed.

If the arrangement to back a default by the Italians, Spanish, Ireland, Portugal and any other country which foolishly decides to sign onto such a suicidal arrangement by pledging its gold, why would Germany, the supposed lender in the scheme, dump the gold into the market after a default?  Wouldn’t these indebted countries and the eurozone be right back to where they started?  And what would prevent China, or any other central bank, from buying the gold?

And finally, why won’t Jon Nadler take up Peter Grandich on the $2 million bet that gold will reach $2,100 before it hit $1,000?

Nadler is all talk and a fraud.  He appears to suffer from the same disease as Dennis Gartman and Jeff Christian suffer from.  None has any shame and appear to not be moved by an entire gold community laughing at the spectacle of these three men appearing on television programs after making one bad call after another.  It took Goldman Sachs years to ‘downgrade’ Abby Joseph Cohen.  How long will it take Bloomberg to figure out that the viewer has figured out that Bloomberg intentionally gives Nadler airtime to whore for the Fed?

U.S. States Prepare for Hyperinflation

CNN reports that 13 states seek approval to issue money in preparation for a U.S. dollar collapse.

“In the event of hyperinflation, depression, or other economic calamity related to the breakdown of the Federal Reserve System … the State’s governmental finances and private economy will be thrown into chaos,” stated North Carolina Representative Glen Bradley in a bill he drafted in 2011.   Sign-up for my 100% FREE Alerts

Sensing that the Europe’s crisis has bought the Fed and U.S. Treasury some time, for now, State legislators have already begun to prepare for the eventual rejection of the U.S. dollar as a viable means for exchanging goods and services.

According to the U.S. Constitution, Article 10, Clause 1 (Contract Clause), States can issue their own money as long as they are in the form of gold and silver coins.

Article 10, Clause 1 (Contract Clause)

No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility.

How much time the U.S. dollar has left as a trusted currency is unknown, but the countdown has begun.

Like the sudden collapse of sub-prime mortgage market—which spread throughout all mortgages—and Greek sovereign debt in 2010—which spread to the rest of Europe—one day Americans will wake up to a crisis in the dollar.

The man who warned of a credit bubble in the U.S. mortgage market in 2006, Doug Nolan of Prudent Bear, told Financial Sense Newshour he likens Greece to the sub-prime mortgage market and the currency dominoes the besieged nation will eventually topple across the globe.

“I refer to this [U.S. Treasuries] as the global government finance bubble and I draw parallels between Greece and sub-prime U.S. mortgage back in the Spring of 2007,” said Nolan.  “In the Spring of 2007, confidence started to falter for sub-prime.  The risk is part of mortgage debt and of course you had the aggressive policy response.  You actually had a very speculative market and you didn’t have a serious crisis until sometime later in 2008.  Now we see Europe; they had the initial Greek crisis; they responded aggressively with the bailout.  That bought them some time, but then things started to spiral out of control last year.”

Though U.S. Representative Ron Paul, TX has sponsored the “Free Competition Currency Act” in the U.S. House of Representatives, State legislators are waiting for Washington.  They have proposed varying methods of introducing gold and silver as a go-to currency in their States so that their citizens can continue to buy groceries, services and durable goods, such as cars and major appliances after the fall of the dollar.

However, logistical issues abound for the States.  Carrying around bullion coins aren’t practical and deviate grossly from ingrained habits of Americans in the use of money in a modern banking system of paper and plastic cards.  But Utah has a solution: Utah Gold & Silver Depository, where clients can continue to use plastic cards.  But instead of transferring fiat currency to a merchant with plastic cards, gold and silver grams would transfer instead to pay for goods and services.

“A Utah citizen, for example, could contract with another to sell his car for 10 one-ounce gold coins (approximately $17,000), or an independent contractor could arrange to be compensated in gold coins,” said Rich Danker, of public policy think tank American Principles Project in Washington, D.C.

Of the 13 States gearing up for its own currency, Danker told CNN he expects four States could pass legislation this year.  Those States include South Carolina, Georgia, Idaho and Indiana.

“I think we could get a couple passed in this legislative session, and that would show this is mainstream, popular and it would be a justification for more of the risk-averse states for doing this,” he said, suggesting a domino effect with other States could result across the U.S.

According to Prudent Bear’s Nolan, the time bomb ticks away on the dollar, and when it blows, the demise of the dollar could move rather quickly as we saw in both the sub-prime mortgage market in the U.S. and in Greek sovereign debt in 2010.

“All of a sudden you could see a situation where the sovereign debt problem in Europe leads to question on the solvency of European banking system, on global derivatives, counter-parties, and maybe at the point there will be concerns with other structural debt issues be it Japan or the U.S.,” said Nolan.  “Once the global community loses confidence in the capacity of policymakers to sustain credit excesses then it’s a totally different ballgame than what we see in Europe.”   Sign-up for my 100% FREE Alerts