No currencies are rising

There were a few responses to requests for comments which I will address as best I am able.

The requests were triggered by reader ER with the following:

When will the dollar collapse? When will hyperinflation start? Who knows?
On Sunday, 03/20/2011, this site posted a report by Chris Martenson, which he issued on 03/16.2011, in which Martenson stated that from 3/16: “Taken together, I think we’ve got at least a month until things have shifted enough that preparations will become either difficult or irresponsible.” In contrast, Brian Wesbury said on C-Span this past weekend that he does not think there will be a dollar collapse. I could not find the C-Span video link.
Some say doom will come in a month or so (Martenson), hyperinflation in mid-2012 (John Williams, Gonzalo Lira), and QE2…QEnth (Faber). Yes, it is better to be “a year early than a day late,” and do the prudent things to prepare. Beyond doing the preparations, does one get a job now to have extra income as a cushion, or does one have two to three years to go to community college to earn an associates degree in nursing? That is a real life decision for many adults who range in age from the thirties to the fifties.
Any opinions?

Responses were comments/opinions by readers more than additional questions. I encourage those interested to read these at the link highlighted above.
The rest of this article will deal with ER’s questions/issues above. ER answered his own questions properly with “Who knows?” That is, there are no answers, only opinions. Mine follows.

Dollar Collapse

Regarding a dollar collapse, the dollar has weakened against 30 of 34 metrics in the last 12 months as shown below:

A green number means that entity currency/commodity has increased against the dollar.
This graphic suggests the dollar collapse is well underway. All currencies shown above are declining in value. The dollar is declining faster likely as a result of Bernanke printing money at a faster rate than anyone else in the world.  Hence other currencies are not declining as fast as the dollar (green numbers) for these currencies. Measuring against declining standards understates the real decline in the dollar. No currencies are rising, they are all declining, but at different rates.
One measure of the severity of the decline can be approximated by measuring against what are considered fixed values. Many view the so-called monetary metals, gold and silver, as representative of a fixed standard of value. Gold increased 29% last year and silver increased 116%.
There is no perfect way to measure the decline in the dollar, but these two metals cannot be duplicated like fiat currency. One of them has virtually no industrial demand (gold), so its movement probably reflects both the decline and anticipated decline in the dollar. Silver has an industrial demand as well as a monetary demand so is less applicable. Rumors of COMEX shortages of silver might also be driving up its value.
Regardless, based on either of these metals the dollar has had a significant drop in value over the last 12 months. In fact, against gold it has lost substantial value for 10 consecutive years.

Economic Collapse

Estimating the economic implosion (I believe it is inevitable because we are well past the tipping point with debt levels that cannot be supported) is much more difficult. The timing could be very soon if the government discontinues Quantitative Easing (perhaps six months after cessation Depression could become an acceptable term).
Continuing QE makes an ending impossible to time. Inflation will move up and QE will have to continue to accelerate in size over time in order to continue “boosting” the economy. At some point, hyperinflation breaks out, the economy collapses and we end up in a Depression.
The only difference between the two scenarios is the timing of the Depression and the condition you are in when it occurs. Ceasing QE enables you to go into the Depression with your wealth relatively intact. Continuing QE pushes the Depression down the road. When it comes, however, your wealth has been destroyed by hyperinflation and you enter a Depression with virtually no wealth. See the post Inflation and Hyperinflation for additional background.
Debt needs to be liquidated not increased. There can be no recovery until this liquidation occurs. It will be painful when it does, but much worse if a hyperinflation precedes it.

Other Issues

Regarding ER’s question regarding the pursuit of a nursing degree, there is no right answer. There are too many unknown variables over and above the economic uncertainty. For example, are you married with a spouse who works?, do you have any savings?, what kind of money can you make with your current skill set? etc. ). No stock answer is possible.
My general advice would be to make the investment in human capital. This presumes that you can afford to do this and would do it if you weren’t worried about the uncertainty associated with the future. One cannot live one’s life afraid. You only have one ride on this planet. Don’t cower in the corner because of the mess we face. Our ancestors faced much worse and did not let it stop them.
If the economy goes into a Depression while you are in school, that might be a better place to be than sitting at home unemployed. Likewise, saving money is not likely to be a useful strategy if the dollar is going to become worthless.
There is no right answer to much regarding the future. We are all guessing to the best of our ability and our personal situations. You must be cautious, but that is different from being paralyzed with fear. We will prevail through these tough and challenging times.