The projections prepared by the technicians in the budget office in relation to the fiscal deficit and public debt in the coming years, are truly alarming. Why do? do you speak of risk of hyperinflation in the U.S. economy? Risks hiperinflacionarios although these moments they are relatively contained, exist and are linked to excess liquidity with which the U.S. economy will be in the coming months. The crisis forced the Fed to flood the market for dollars that were absorbed by the market thirsty. But economic recovery will generate a reversal of preference by the liquidity of the market and we will find ourselves with a great excess of dollars that nobody will want to and that will oblige the Monetary Authority to remove all the excess liquidity as quickly as possible. But the factors that produce the fall in demand for dollars in the coming months are not in what I comment on them.
There is a problem as serious as the previous and that relates to the lower desire that generates the American currency as a reserve currency. Many economies are balancing the composition of their international reserves against the US dollar, pushing downward. According to Digital freedom, at the beginning of 2009, China had American bonds US $801.000 million. In June, the figure had dropped to US $766.000 million and the trend continues. Or it has not only made China acquire us assets but that is also now shedding of some of them.
The risk of an inflationary U.S. climbing can also accelerate widespread flight from the dollar. The economy and the markets go hand in hand the dollar is collapsing, and with hand it comes the rise in commodities. What are the causes of the decline of the dollar and how we can predict this movement to win in the markets? You have to understand basic concepts of Economics and its interrelation with financial markets.