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After subprime crisis and liquidity crisis, it is now the turn of currency crisis.

After subprime crisis and liquidity crisis, it is now the turn of currency crisis. Investment guru Jim Rogers believes that the worst of the economic crisis is not yet over and a currency crisis can happen this year or the next year. And what is the reason he has cited for the same? There is too much debt in the system. For instance in the US, the deficit has soared above the US$ 1 trillion mark and is not likely to reduce dramatically for some years to come. What is more, the gargantuan stimulus packages announced by the Obama administration while they will pull up the economy in the short term, is certain to come back and haunt the economy in the longer term. Hence, the pressure on currencies notably the dollar is likely to intensify.

Rogers further believes that the current recovery is a just a consequence of the fact that consumption had plunged so drastically in 2008 that people have to buy things that they need in 2009. And that it would be folly to assume that China would bail out the world from the crisis, when it has its share of problems as well for which it is utilizing the resources it had saved up till date. I believe that Jim Rogers has come up with some valid arguments and it will be interesting to see how the dollar reacts to this chain of events over the coming months.

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