Back in March, I coined the acronym MOAB (for Mother Of All Bailouts), to describe the Federal government’s continuously-expanding response to the global credit collapse. My family has been getting great chuckles mentioning each time that commentators and legislators start using the term. These have included Michelle Malkin, Congressman Ron Paul, Senator Richard Shelby, and Joel Skousen. So now we are waiting for a pronouncement for Al Gore, that he invented both the term and the acronym.
The government’s virtually uncontrolled bailout spree has now expanded to more than 1.5 trillion dollars, and there is no end in sight. At best, this “buy your way out of the problem” approach–via government spending–will result in a decade or more of economic stagnation. This is what has happened in Japan for 15+ years. But at worst, the MOAB will result in the utter destruction of the US Dollar, through hyperinflation. Unless our trading partners continue to go along with the convenient fiction that the US Dollar has meaningful substance, then it is all over. I predict that within the next year, the US Treasury auctions will turn into a farcical comedy . Foreign investors will start to demand higher and higher yields in order to buy any US Treasury paper. Once that cycle begins, the handwriting will be on the wall for the US Dollar.