September 20, 2007 (LAPC)--According to Ambrose Evans Pritchard, who speaks for certain financial interests in Britain, Saudi Arabia is considering breaking with its currency's peg to the U.S. dollar, a move that could further collapse the dollar.

"This is a very dangerous situation for the dollar, Pritchard quotes Hans Redeker, currency chief at BNP Paribas as saying. "Saudi Arabia has $800 billion in their future generation fund, and the entire region has $3,500 billion under management. They face an inflationary threat and do not want to import an interest rate policy set for the recessionary conditions in the United States."

Inflation in Saudi Arabia is already 4% and its M3 money supply is surging at 22%. The United Arab Emirates has a 9.3% inflation rate and Qatar has reached 13%. Kuwait ended its dollar peg last May.

The key issue, Pritchard writes in London's Daily Telegraph is foreign purchases of U.S. Bonds, which collapsed from $97 billion to 16 billion in July. Pritchard writes, "The risk is that flight from US bonds could push up the long term yields that form the base price of credit for most mortgages, driving the property market into even deeper crisis."

He quotes former George Soros partner, Jim Rogers as saying, "If Ben Bernanke starts running those printing presses even faster that he's already doing, we are going to have a serious recession. The dollar's going to collapse, the bond market's going to collapse. There's going to be a lot of problems."