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The current generation of Fed staff has not experienced a crisis like
this. Neither have previous generations of Fed staff. It is new
territory. There is apparently concern that the dollar could go into
a free fall -- not the free fall that it is in currently, but a
precipitous free fall. This would, of course, be new territory for
everyone, around the world.
Naturally any company that has dollar income and must make ongoing
payments in other currencies and has not hedged itself against such
an event would be in deep trouble, while Coke might do okay. Firms
that rely on imports would be adversely affected. Fed note holders,
like bond funds, like China, and anyone else who had relied on the
stability of the dollar, would be badly hurt. Food prices would
rise. Oil would rise far beyond $110 a barrel. Perhaps some
brokerage firms and the accounts they hold and more firms like BSC
would be endangered. And so on.
I'd like to see a careful and thoughtful analysis of the consequences
of such an event. Would someone here direct me to such an analysis?
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