What is the outlook for the fate of the U.S. Dollar in light of soaring government debt?
*Bloomberg, by Bob Chen, July 6, 2009:
“The dollar and U.S. Treasuries are both likely to slide as soaring
government debt in the world’s biggest economy undermines confidence in
its assets, according to Jim Rogers, chairman of Rogers Holdings.
‘The government is printing lots of money and borrowing even more; that’s not the basis for a sound currency,’ he said in a telephone interview today from Singapore. ‘The idea that anybody would lend money to the U.S. government for 30 years at 3 or 4 or 5 or 6 percent interest is mind-boggling to me.’
Rogers, the author of books including ‘Investment Biker’ and ‘Adventure Capitalist’, said he holds fewer dollars than a year ago and plans to ‘short U.S. government bonds someday.’ A short bet involves selling a security you don’t own with a view to buying it back after the price has fallen.
The U.S. is stepping up debt sales to finance a record budget deficit as it tries to spend its way out of a recession and that’s causing the supply of the securities to balloon. After more than doubling note and bond offerings to $963 billion in the first half, another $1.1 trillion may be sold by year-end, according to Barclays Plc, one of the 16 primary dealers that are obligated to bid at Treasury auctions.”
*This information is solely a highlight of the opinion of a third-party publication and is incomplete. Please subscribe to this publication for the full and timely opinion of the author and call a Monex Account Representative for any additional up-to-date information. This is not an offer to buy or sell precious metals. Investors should obtain advice based on their own individual circumstances and understand the risk before making any investment decision.
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