Do you see investors losing confidence in the U.S. dollar and could this be part of the “final sequence” that leads to the “Aftershock”?
The dollar right now is clearly a safe haven--people view it as the safe currency. With that said, you're getting more and more people questioning whether the role of the dollar will be maintained over the next few years or whether there's going to be issues there. These aren't brand new issues. We've totally seen talk about this before, but it's coming up again at a level that makes me believe that people are starting to consider a world where the dollar is not as preeminent and that's the kind of thing that, of course, makes people a little bit nervous ultimately about stock and bond investments in the U.S. It makes people more worried about any kind of dollar denominated type investment--one reason people like gold.
I think although we're not at the point where people's views towards the dollar are going to shift today or tomorrow. I think that's all part of what ultimately kind of feeds into that final sequence...is people's faith in the Fed goes at the same time foreign investor's faith in the dollar starts to go and the two are related because part of what's driving foreign investor's faith in the dollar is faith in the Fed, right? The domestic faith in the Fed helps investors outside and when one goes the other starts to go fairly quickly. It's just like the bubble economy when housing pops pretty quick it starts to put pressure on consumer spending, puts pressure on the stock market, and everything starts to spiral down. The same thing happens in the final sequence is as you're having problems with building faith in the Fed, maybe problems in China, then your going to get problems with foreign investors with faith in the dollar, it all sort of works together and creates a vicious spiral downward.