In God We Trust--Not The Dollar
This is a quote from The Tipping Point at Bloomberg.com.
The Dollar's Credibility
"Reaching the `tipping point' where the U.S. for the first time since the second World War ceases to have a positive net return on its net assets could be seen by the market as a significant blow to the credibility of the dollar,'' the economists say.
"In a context where the external net worth of the U.S. is negative and the return on its net assets also turns negative, market participants could start demanding a higher premium on their dollar assets.''
That the U.S. has been able to sustain financing for its international deficits up to this point is primarily due to the American dollar being the world's principal reserve currency, the center of the global monetary system.
Once people around the world lose faith in the dollar, it becomes WORTHLESS.
BTW--"premium on their dollar assets" translates into INTEREST.
So, expect a steep increase in interest rates in a last ditch effort to keep capital investments in dollars.