Posts tagged Dollar
The unthinkable is happening
On one side of the Atlantic, the eurozone debt crisis has spread to the countries that may be too big to save – Spain and Italy – though RBS thinks a €3.5 trillion rescue fund would ensure survival of Europe’s currency union.
On the other side, the recovery has sputtered out and the printing presses are being oiled again. Brinkmanship between the Congress and the White House over the US debt ceiling has compelled Moody’s to warn of a “very small but rising risk” that the world’s paramount power may default within two weeks. “The unthinkable is now thinkable,” said Ross Norman, director of thebulliondesk.com.
Fed chair Ben Bernanke confessed to Congress that growth has failed to gain traction. “Deflationary risks might re-emerge, implying a need for additional policy support,” he said.
The bar to QE3 – yet more bond purchases – is even lower than markets had thought. The new intake of hard-money men on the voting committee has not shifted Fed thinking, despite global anger at dollar debasement under QE2.
Fuelling the blaze, the emerging powers of Asia are almost all running uber-loose monetary policies. Most have negative real interest rates that push citizens out of bank accounts and into gold, or property. China is an arch-inflater. Prices are rising at 6.4pc, yet the one-year deposit rate is just 3.5pc. India’s central bank is far behind the curve.
“It is very scary: the flight to gold is accelerating at a faster and faster speed,” said Peter Hambro, chairman of Britain’s biggest pure gold listing Petropavlovsk.
“One of the big US banks texted me today to say that if QE3 actually happens, we could see gold at $5,000 and silver at $1,000. I feel terribly sorry for anybody on fixed incomes tied to a fiat currency because they are not going to be able to buy things with that paper money.” source – Telegraph UK
Another day, another dollar decline
Not too long ago, NWO mastermind and puppet-master George Soros said this, “an orderly decline of the US dollar is desirable”. Well, in an a-m-a-z-i-n-g coincidence, the dollar is declining in a orderly and swift manner. Imagine that.
“Weakness in the US dollar, which is causing everything to go up—including gas prices, food and stocks—is unlikely to go away soon as a selling frenzy hits the currency market.
The greenback is approaching pre-financial crisis lows and threatening to smash through its all-time low when measured against the world’s predominant national currencies.
A combination of factors accounts for the weakness, with the Federal Reserve’s easy-money policies, huge national debts and deficits and the consequential possibility of a debt downgrade because of the financial mess in Washington leading the way.
In short, as trader Dennis Gartman noted Thursday, “the rout of the US dollar” is in full effect.
“Panic dollar selling is setting in,” Gartman, a hedge fund manager and author of “The Gartman Letter,” wrote in his daily commentary. “This may carry farther than any of us dream of or, worse, have nightmares of.”
How low can it go?” source – CNBC
Just ask George, he’ll tell ya…
As we watch the decline of the American dollar, it is no surprise that China is making a move towards taking over as the nation to hold the world’s new reserve currency.
Hu’s comments, which came ahead of a state visit to Washington on Wednesday, reflected the continuing tensions over the dollar’s role as the major reserve currency in the aftermath of the US financial crisis in 2008. source: AFP
In his remarks, President Hu Jintao did provide some assurance that the dollar would not be dumped immediately, but made it very clear that China has been a major contributor to the world economy and that the process of the yuan taking over the dollar is already moving ahead. He also voiced criticism of the Federal Reserve for trying to prop up the weakening dollar by dumping billions into the U.S. economy. The subject of international currency is expected to play a major role in talks during the Chinese President’s visit to Washington.