Dollar depreciation – how big and how soon?

Image by seiuhealthcare775nw via Flickr

The link below explains the underlying problem that it seems has no resolution and explains in part why Obama is so desperate to get health care reform.. there is no money to pay out on Medicare.

If this happens, and it seems it must, there can only be a very big depreciation in the $... and a rise in gold.. whether the rise in gold will only mirror the loss in value of the $ or go further is the question... my guess is that it will go further, considerably further in the short run...

Other than the American taxpayer who should be very annoyed at this development, the Chinese, Japanese and Indians are not much charmed either as they hold huge $ reserves, all of which will depreciate.. if one of these countries tries to avoid the inevitable by selling treasuries first, before the $ drop, expect catastrophe.. but a much smaller holder, even a private holder could start this run at pretty much any time.

The world is holding its breath and hoping that the $ depreciation goes smoothly...

http://www.sprott.com/Docs/MarketsataGlance/June_2009.pdf