The United States Treasury and the Federal Reserve are throwing a trillion dollars, more or less, into the banking system. And, there’s surely much more to come.

It’s not only the U.S. monetary authorities pumping up the money supply. Their counterparts in every major economy – including the United Kingdom and the Euro zone, China, Russia, Japan and on and on – are doing likewise.

We have never – in the history of money – seen such an expansion in its supply without, after a period of time, a rapid deterioration in its value, in other words, without a rapid increase in the overall price level. More than any other factor influencing the gold market, it is the inevitable rise in price inflation that will propel gold skyward in the next few years.

China is not the only one that has subsidized the US debt markets. Ninety percent of the world – Europe, Japan, Russia, Korea, Saudi Arabia and the rest of OPEC have purchase massive quantities of US debt in the past as well. All these countries are in trouble now with their falling trade and exports to the US. Where will the money come from now to purchase this tidal wave of new US debt sure to hit the markets soon? Answer- the only place possible. The Fed monetizes it – ie creates it out of thin air!

I don’t think the rest of the world is that blind and stupid to not see the handwriting on the wall. IMHO we are going to see a massive devaluation of the US dollar coming and very soon.

On the other hand – China needs the US to keep investing in it and building itself up. China will continue to buy USD at a steady rate – the problem is that the USD is being created much faster now than in the past. China may buy the same amount of USD, but may store any extra wealth in other currencies. It’s not in China’s best interest, at the moment, to hurt the US. But the USD may go down anyways because they are printing it faster than China would ever be able to, or want to, buy them.

So, the problem with the USD is that it is being printed too fast.