Deflation is bad for the US and its economy. Deflation means their debt is worth more – all 18 trillion of it – which means if they want to pay off their debt or even manage it, a dollar that is worth less is better for them to be able to manage debt payments.
The world is flocking to the US dollar as a safe haven due to the Euro crisis with Greece and its own QE. As people buy US dollars thinking its a ‘safe’ place to put their money, it increases the value of that money even though the Federal Reserve is printing money as fast as it can – which really should inflate the currency.
If you look at the upside-down money pyramid, the world reserve currency (US Dollar) is the last stop on the way to the bottom just before gold which is the ultimate safe haven -in the eyes of people who want to preserve their wealth through tough economic times.
If we see a move into gold that means people have lost confidence in the world reserve currency and that would certainly trigger an economic collapse – if one hadn’t already started at that point.
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