America and the Dollar Illusion

For capital market investors, reality
isn't reality until the majority of investors
are convinced it is reality and have
begun reacting accordingly. Right now, everyone
is watching everyone else closely. Everyone
knows the dream of the stable economic
superpower has ended, but everyone is keeping
his eyes shut just a little longer.

Government bonds and shares don't have any
objective value -nothing you can see, weigh,
taste or even eat. Their value is measured by
investors' faith that the purchasing power of $1
million will still be $1 million 10 years from
now, rather than having been reduced by half.
This faith is measured on the markets almost every
second - and the measure used is nothing but
the faith of other investors. As long as the
faithful outnumber the skeptics, everything works
out fine for the dollar (and the world
economy). The trouble starts the day the scale
begins to tip.

Full article.