... make every USA citizen a millionaire and your economy will boom.

I've already picked out the color of my Ferrari!

Gail sez:

This destructive cycle (the flight to dollars) will not continue indefinitely. At some point, central banks will sell US dollars, to try to get currencies more in sync.

As Brian T sez, it's another US- Treasury/Fed- generated 'investment' bubble ... so that won't work.

Hedge funds may begin to (will) fail, as the value of the assets sold is insufficient to cover the debt supporting the assets. Also, it is not clear that the US can continue indefinitely as the source of safety. The US will be issuing many billion dollars of debt to pay for all of the bailouts. At some point, it may be difficult to find buyers for all the debt.

In the financial world, every evanescent money phenomenon is marketed as a long term change in fortunes. Internet businesses will put 'brick and mortar' stores out of business ... forever. Real estate will 'go up' ... forever'. Oil prices will soon be over $300 a barrel and gold has no upper limit ... forever!

Meanwhile, back at the ranch, the US economy is shrinking to a level relative to 'hard' capital; the nominal (cash) trade and government deficits are set to explode along with undeterminable unfunded liabilities; economic decision making is concentrating in the hands of fewer ... who are incompetents or criminals; administrative (discount) rates are set below the level of inflation and jobs are being shed by the tens of thousands, reducing both business and government revenue and driving the deflation cycle forward.

Obviously, the dollars is and will be strong ... forever! Why didn't I think of that? (Slaps self on side of head!)

The Treasury would like to see all the worlds' assets traded for dollars so it can sell it's vast amount of toxic debt into the dollar market. In that sense the Chinese State Newspaper mentioned in the main article is correct ... only for today. Tomorrow is another story.

Nobody can create debt to sell like the United States Government. Right now at the Treasury Department, there is an intern in a Ramones tee shirt slouched in a back room - not far from the loading dock - with laptop in lap and finger poised;

"How many zeros you want after that number, Boss?"

$9,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000 ...

Following the script as it has played out so far, as soon as the dollar reaches a level where people on the street who know and care little about such things remark about the dollar's strength in casual conversation ... the Treasury will dump and the whole bubble will deflate with a whoosh.

I know that, Gail the Actuary knows that, the Chinese know that ... the Treasury HAS to know that ... right?

Will this be the 'last bubble'? I don't know!!! I thought the Fannie/Freddie bailout was the 'last bailout'. I was so wrong!

The potential for greater bubbles is only dependent on how effectively fear can be monetized. The fear of losing all; 'Double or Nothing!'

'Double or nothing, again!' It's only Monopoly money, after all. Other peoples' Monopoly money.

Lessee .... Dot Com Stocks ... residential real estate ... commodities ... now US dollar. Each bubble coming harder and faster on the heels of the last, faster and faster ... so fast it's hard to keep track ... each crashing in turn. Obviously an endgame of sorts to the unlimited- credit money policy - it has to be! The cycle is faster, more destructive bubbles. These bubbles are having greater significance overseas; bad real estate loans brought the banking system to its knees worldwide, the commodities bubble put millions on the edge of starvation. What happens next? There are too many nukes and Kalashnikovs ... out in the great world to be gambling so recklessly ... like idiots.

Ironically, if the US cancelled the banking bailouts, negotiated its debt with overseas creditors, decentralized business and cut its umbilical to the national till, encouraged organized labor, rationed fuel and energy, put limits on entitlements and announced a multi- trillion dollar energy and transport infrastructure upgrade ... the dollar would tank. People love the fantasy that endless money growth will make us all winners in the economic lottery.

When the Ferrari bubble hits, I'm ready.