What is the outlook for the fate of the U.S. Dollar in light of soaring government debt?
“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.”