Monday, April 18, 2011

The inevitable Downgrade

Trends are still in line.  The debt watch is now on downgrade and this only makes the economic system's reliance on gold as the loan of first recourse that much more significant.  Silver's worth is derived from the same ability as gold's; it is a real asset.  The US Fed/Treasurie was forced long ago to leverage these assets, and now in order for the system to stay in line, they must let them appreciate.

The dollar had a bounce today, but with its proprietor in the cross hairs, it looks to be the first in line to take the brunt of the force that will happen when the downgrade does occur.  Everything is at the forefront now.  The end game has been established.  The rating will be downgraded.

The AAA rating is in place because the US houses the reserve currencie.  Logic dictates this, for if the world reserve currencie was downgraded, the world goes with it.  There will be one of two outcomes 1)  the debt is downgraded and the dollar gives up its status in nominal terms, or 2) the US concedes the status and a new currencie is issued to replace it.  Both will put finance into a new paradigm.  Both have the same result.  The capitulation of the Keynesian policy is at hand, and with it, the dollar.

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