PRINT THOSE DOLLARS

With Europe coming apart at the seams, money is leaving the continent and flowing into U.S. Treasury bonds. This will turn out to be a grave mistake. U.S. dollar assets are anything but safe havens. When the spotlight shines again on the USA, it will reveal the American financial system to be no different than that of Europe.

With the over-the-counter derivatives now exceeding 1 quadrillion dollars and JP Morgan's derivative positions already starting to blow up, the Federal Reserve and the European Central Bank have no choice but to create literally trillions of dollars out of thin air to keep the global system from imploding. The resulting inflation will do great damage to the U.S. dollar and the Euro. The "safe haven" bond market will eventually plunge along with everyone's purchasing power.

A few people will protect themselves, but the majority will keep their heads planted firmly in the sand.

May 15, 2012