'IS THE WRITING ON THE WALL FOR THE U.S. DOLLAR?' begins an article by Daniel Altman in the International Herald Tribune March 28. Altman quotes Bridgewater Associates, a manager of more than $100 billion of institutional and hedge fund money based in Westport, Connecticut, which has been issuing warnings in its daily reports this month such as "The Breakdown of the Dollar System," which says: "As we often say, we've seen this movie many times, and we know the ending."
Altman notes that the Bush budget will expand government debt even further (it will "raise the debt-to-GDP ratio in 2015 to 37 percent, versus 29 percent under current law," he writes) and the high probability that Asia will diversify from the dollar. "Bridgewater says it believes that the dollar is already beyond the point of no return."
After mentioning contrary views, Altman says: "Though action by the Fed and a clampdown on government spending could spare the dollar, they would both be bad news for the economy.... One of the surest forecasters of recession is a tightening of short-term credit by the Fed.... Whichever way you cut it, we're in for a bumpy ride."
