One of the most important financial questions on my mind these days is “What is the end game for the ‘strong dollar policy’?”

As members of the economics team who engineered this policy in the mid-1990’s return to Washington, the fundamentals behind maintaining the dollar as the world’s reserve currency have never looked more tenuous. The fate of the dollar in 2009 and the impact of widely liberal monetary policy in the US (and among key allies in the G-8 nations) could have profound implications for our lives and finances.

Are we going to continue to “slow burn” or is a radical devaluation of the dollar a possibility?

Have a look at these two news articles. They demonstrate the central banks’ willingness to print as much money as possible to prevent a deflationary spiral from taking hold:

Bank of England Mulls ‘Nuclear Option’ of Cash Injection
Deflation Virus is Moving the Policy Test Beyond the 1930s Extremes

An important component of this question is the financial deterioration of state and local government. One of the major risks before us is whether municipalities will be pressured to privitize assets which are critical to our health and well-being:

Muni-Bond Funds Face Record Losses

I’ll be discussing these subjects in greater detail this Thursday night on The Solari Report conference call (Dec 11, 9PM EST). I’ll also be talking with Franklin Sanders of The Moneychanger about recent developments in precious metals markets. In our “Let’s Go To the Movies” segment, we’ll be touching on The Bourne Identity and some of its lessons for our own lives.

If you’re not a subscriber yet, you can learn more about The Solari Report and subscribe here.

I hope you’ll join us.

Note: Solari Report subscribers can now listen to Catherine’s discussion of this topic via MP3 recording. You can subscribe monthly or annually here.

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3 Comments

  2. AIG’s 2008 proxy shows Fidelity and the insider group as the largest investors:

    http://www.ezodproxy.com/AIG/2008/Proxy2008/images/AIG_Proxy2008.pdf

    OWNERSHIP OF CERTAIN SECURITIES
    The following table contains information regarding the only persons who, to the knowledge of AIG,
    beneficially own more than five percent of AIG Common Stock.
    Name and Address Number Percent(1)
    Shares of Common Stock
    Beneficially Owned
    FMR LLC and Edward C. Johnson 3d (collectively, the FMR Group)(2)
    82 Devonshire Street
    Boston, MA 02109 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 144,915,088 5.714%
    C.V. Starr & Co., Inc.; Edward E. Matthews; Maurice R. Greenberg;
    The Maurice R. and Corinne P. Greenberg Family Foundation, Inc.;
    Maurice R. and Corinne P. Greenberg Joint Tenancy Company, LLC;
    Starr International Company, Inc. (SICO); Universal Foundation, Inc.;
    C.V. Starr & Co., Inc. Trust (collectively, the Starr Group)(3)
    399 Park Avenue
    17th Floor
    New York, NY 10022(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .354,987,261 13.6%

  3. Greetings! I was listening to Kathryn Fitts interview with Art Bell this evening on a replay. I was wondering if anyone was aware that AIG is held by the Carlyle Group? And also that the motor engine company of General Motors is held by the same? IS it any wonder they all got paid this week? I truely enjoyed your talk and hope he has you on the show again..and yes this is going to be a slow death..and to think I nearly was talked into investing with these birds. Something in my investigators intuition told me to STOP and run like the wind in the opposite direction. I did! Thankyou so much for taking the time to share your thoughts on the airwaves and for reading this note…..denise

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