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US Dollar Rally Won’t Last

This from blogger Kaimu:

“Right off August 6, 2009 US TREASURY DAILY STATEMENT for FY 2009 … remember we have about another one and a half months left for FY 2009.

Total outlays = $10.3 TRILLION
Total US Debt issued = $7.8 TRILLION
Total US tax revenues = $1.7 TRILLION

(This is) $7.8 TRILLION of Bills, Notes and Bonds (issued by the treasury to fund our government’s spending over the last 10.5 months). That…does (not) include the $38 TRILLION of IOUs that (the government used to) the Trust Funds (e.g., Social Security, Medicare, etc) over the past 10 months.

Look at the measly tax revenues of $1.7 TRILLION. Our tax revenues need to be 460% higher to just cover the US Treasuries our government has issued.”

For those of you who want to check this out, here is the link directly from the government: http://www.fms.treas.gov/webservices/show/?ciURL=/dts/09080600.txt

Anyone that believes the dollar has any chance of resuming its predominance in the world, they just need to look at these numbers. The Chinese do, that is why they are making noises about wanting the world to transact its business in a basket of currencies instead of dollars. They are smart enough to know that in the history of the world, anytime a government has amassed so much debt compared to its ability to service that debt, they simply turn on the printing presses to devalue the currency so they pay back the debt in money that is worth less ( or is that worthless? ).

Don’t jump on the strong dollar bandwagon. Government spending is out of control – the Treasury’s financial statement makes that clear.

Portfolios need to be structured with core holdings that can withstand the coming devaluation – I truly expect it to accelerate at some point. Maybe not tomorrow or the next day, but this baby is going down.

Mark