Analysts: Dollar collapse would result in 'amero'

Think deep recession likely regardless of Fed's actions
Posted: December 13, 2006

 

"The key in how low the dollar goes is the interest rates," Chapman told WND. "In January, the Fed is going to have to make a decision which way to go. If Fed rates go up, the dollar will hold in the 78.33 range, but the stock market and the economy will tank. If next year the Fed lowers rates to keep the economy from crashing, the bottom will fall out of the dollar, and I see it going as low as 55. Once the dollar hits bottom, it will take the stock market and the economy right with it anyway. The Fed is in a box they can't get out of."

As WND reported earlier this week, in an unusual move, the Bush administration is sending virtually the entire economic "A-team" to visit China for a "strategic economic dialogue" in Beijing Thursday and Friday. Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke are leading the delegation, along with five other cabinet-level officials, including Secretary of Commerce Carlos Gutierrez. Also in the delegation will be Labor Secretary Elaine Chao, Health and Human Services Secretary Mike Leavitt, Energy Secretary Sam Bodman, and U.S. Trade Representative Susan Schwab.

But Chapman doubts the trip will help the Fed to engineer a slow dollar slide.

"The Chinese are going to do what the Chinese want to do, not what we want them to do," he said. "I believe the Chinese are going to send Treasury Secretary Paulson and Fed Chairman Bernanke home packing, with little or nothing to show for the trip."

How severe will the coming dollar collapse be?

"People in the U.S. are going to be hit hard," Chapman warned. "In the severe recession we are entering now, Bush will argue that we have to form a North American Union to compete with the Euro."

"Creating the amero," Chapman explained, "will be presented to the American public as the administration's solution for dollar recovery. In the process of creating the amero, the Bush administration just abandons the dollar."

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