[Originally posted on iTulip.com]

My simple minded take on the situation is as follows.

First of all, nevermind that various countries, currencies, crooks, congressmen and companies are involved.

We (us economically active humans on planet Earth) have a world financial system that currently stands atop U.S. Treasuries. Mind you, Treasuries are --not-- simply fiat Monopoly Money (Parker Brothers board game). Rather Treasuries are based on the monetized income stream from us good old American taxpayers. Treasuries are "good as gold" because the world's strongest economy for over the last half century pays interest on Treasuries from its tax collections.

Now we (economically active humans) have built a flaming house of cards of credit, debit and a**wipe paper atop these Treasuries, which is now in a big time old fashioned Panic. Actually it's kinda fun being able to see such a Panic up close and personal, while I have the means and ability to realize some of what's happening. But perhaps I say that because I sold all my stock, and my overpriced house in California, last year.

Anyhow, as with any panic in leveraged or less secure assets, the underlying asset becomes sought after, as the fallback. If the underlying "strong" currency is seashells, gold or Treasuries, it doesn't matter. When a bubble of overpriced or overleveraged or risky assets is built atop that strong currency, the strong currency becomes in great demand again when the bubble collapses, as people unwind their failed "investments" and hoard the strong currency.

It's time to trade in the Trash for Treasuries, and their more convenient, (very slightly) less profitable, alter egos, dollars.