Debt Default Will Kill the Dollar-Brandon Smith

"Economic and political writer Brandon Smith thinks America is in deep financial trouble, and the Fed knows it.  Smith contends, “First of all, I’d like to point out that at the end of last year, I brought up the prospect to the alternative economics community that the ‘taper’ was real, that the Fed would start cutting QE stimulus.  I received a pretty negative response from that concept, which is understandable because a lot of people in alternative economics and the liberty movement are focused on the concept of hyperinflation through printing.  I am pointing out through my articles on ‘taper’ that there is more than one way to kill the dollar.  It’s not just about printing.  There is also the issue about debt default and how that can kill the dollar’s world reserve status and kill the dollar’s value in the process.  So, the ‘taper’ is a huge part of that process of debt default.”  

Smith goes on to say, “I find it interesting the Federal Reserve institutes the ‘taper’ just before we saw major downturns in global manufacturing.  The Baltic Dry Index is starting to crash again.  We’re starting to see trouble in emerging market currencies.  You could say that maybe that’s coincidence that the Federal Reserve started the ‘taper’ before those negative indicators started to become visible.  I don’t think that was a coincidence.  I think they knew that those negative indicators were coming, and the Fed is insulating itself using the ‘taper’ concept.  Basically, what that means is the Fed is pulling back its QE because the effects of QE are diminishing.   Stimulus has a shelf-life.  Printing has a shelf-life for its effectiveness in manipulating markets and propping up stocks.  I think we’ve hit the point where QE is no longer effective.  The shelf-life is over.  They are pulling the QE back now because they don’t want it to be known to the public that QE has become ineffective.  They don’t want QE to be blamed for a stock market implosion.  So, they are pulling it back because they know this downturn is coming.”  

What about talk that the Fed is ‘tapering’ QE to intentionally cut the legs out from under the market?  Smith explains, “Ultimately, the Fed is not pulling back from QE because the Fed wants to cut the legs out from under the market.  I think the market is losing its legs regardless.  They are pulling QE back because what happens if we have a stock market implosion while stimulus is running?  I am saying the Fed is removing QE as part of the equation because it knows an implosion is going to happen, and they don’t want to be blamed.”  Smith predicts that another $10 billion of QE, or money printing, will be cut at the next Fed meeting.  Smith says, “The Fed is looking to end this by the end of the year, but maybe even faster.”  

at http://usawatchdog.com/debt-default-will-kill-the-dollar-brandon-smith/