[This is a long article – part valuable information and part rant. -Bob]
By Gijsbert Groenewegen – Re-Blogged From http://www.Gold-Eagle.com
In Part I I explained the counter-party risk that is all around us – and will come to the fore in the next financial crisis. In this second part I reflect on the rescue operations of the Fed following the 2008/2009 recession and the following QEs and ZIRP policies that have led to diminishing returns and that will ultimately weaken the US dollar: the biggest counter-party risk of all counter-party risks.
Addendum 8 – CDS, Credit Default Swaps. Ultimately it should be considered that when we encounter these systemic events that it will impact the underlying currency. For example when the pension underfunding gets so problematic that the Government has to print more money to meet and rescue the obligations the counter-party risk will be reflected in the devaluation of the currency or the loss of purchasing power, the goods that you can buy with the same amount of nominal money will tumble.