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George Soros Soon to Profit from Run on Dollar?

George Soros to Profit From Run on Dollar?WASHINGTON: George Soros is positioning himself to set a new record in profits, thanks to the Obama administration. Due to the profligate spending of congress the US is well on its way to defaulting on its current obligations, possibly within the next 12 months. How is that possible, you say? Let’s take a look at it.

For example, let’s say you are running a household burdened by credit card debt, and that your monthly income is not adequate to pay your bills. Your next course of action? Bankruptcy. Same thing with countries, only it is called default. We saw that just last week in Dubai:

Dubai shook investor confidence across the Persian Gulf after its proposal to delay debt payments risked triggering the biggest sovereign default since Argentina in 2001. November 26, 2009. Bloomberg News

How can that happen to a country? By not having sufficient reserves to cover its short term obligations.

Alan Greenspan established a policy of managing debt load by limiting short term debt to the amount of liquid reserves. The thought is that a government should have enough cash on hand to meet short term obligations (less than 12 months) in case foreign creditors should demand payment. This policy is known as the Guidotti-Greenspan rule. It appears that rules are meant to be broken, as far as the current Fed is concerned:

Within the next 12 months, the U.S. Treasury will have to refinance $2 trillion in short-term debt. And that’s not counting any additional deficit spending, which is estimated to be around $1.5 trillion.

Put the two numbers together. Then ask yourself, how in the world can the Treasury borrow $3.5 trillion in only one year? That’s an amount equal to nearly 30% of our entire GDP. And we’re the world’s biggest economy. Where will the money come from? Porter Stansberry, DailyWealth.com

Where will the money come from? The Federal Reserve’s answer is to borrow more money. Try that next time you get behind on a credit card. Just pay it off with another credit card. How long do you think you can keep that up? Can it work any better for a country?

The rising US national debt is the result of many years of congress’s obfuscation and prevarication. Congress uses its checkbook to buy votes, without concern of the underlying damage they are causing our country by increasing our ponderous debt burden.

The Fed borrows money by selling US Treasuries, but appetite for those treasuries is becoming satiated. Several treasury auctions this year have required the Fed to buy its own debt to prop up the price of its securities. When they can no longer borrow money they will just print it. In fact they are already printing dollars like they are going out of style. (They ARE going out of style.)

Moody’s has warned that the US is in danger of losing its AAA rating. When that happens foreign governments will begin dumping dollars, devaluing our currency and causing economic ruin.

Who's Pulling the Strings?

Who's Pulling the Strings?

A run on the dollar is not such a bad thing, just ask the biggest financier of this administration, George Soros. Soros made one billion dollars in one day shorting the British pound on September 6, 1992. This trade was the single most profitable trade in the history of the world. Never mind destroying the British pound and the savings of an entire country– George Soros amounted to a modern day Reverse Robin Hood.

With a man like this backing Obama, and with this administration committing financial harikari, you have to wonder. It looks like it will soon be payback time for George Soros. Is he trying this time to make one trillion dollars in one day, someday in our future? Then what is he going to do with that money?

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