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The U.S. dollar is falling steadily against the Euro and many other major currencies. If this trend continues, the repercussions for the U.S. economy would be significant: higher inflation, higher interest rates, and a lower standard of living. It could also lead to the rapid dethroning of the dollar as the world's primary reserve currency. Perhaps most worrisome, the slide in the dollar risks becoming a rout that could trigger another global financial crisis. The Obama Administration has advanced a broad slate of policies sharing the consistent side effect that they would weaken the economy soon and indefinitely. For example,...

From May through October of 2008, Zimbabwean stocks skyrocketed, shooting from 72,000 to almost 400,000 by early November as measured by the S&P/International Finance Zimbabwe Index. For intrepid investors with a world bent, it would appear to be an attractive return of roughly 5,300%. The only problem is that, while investors had indeed earned more Zimbabwe dollars, the value of those dollars over the same period had nearly evaporated amid the country's hyperinflation, meaning the "return" was actually a catastrophic loss. One Zimbabwe dollar in May of 2008 had lost 99.99% of its purchasing power by November of that same...

China’s Dollar Problem Kenneth Rogoff Kenneth RogoffCAMBRIDGE – When will China finally realize that it cannot accumulate dollars forever? It already has more than $2 trillion. Do the Chinese really want to be sitting on $4 trillion in another five to 10 years? With the United States government staring at the long-term costs of the financial bailout, as well as inexorably rising entitlement costs, shouldn’t the Chinese worry about a repeat of Europe’s experience from the 1970’s? During the 1950’s and 1960’s, Europeans amassed a huge stash of US Treasury bills in an effort to maintain fixed exchange-rate pegs, much...

The report yesterday in the UK's Independent newspaper by Robert Fisk triggered several slightly bizarre reactions which ranged from brandishing the respected reporter as a conspiracy nut to dismissing the allegations as not very useful since Mr. Fisk is not by training an economist. (Actually I would have thought that was to his credit). What was questionable about the Independent article was the emphasis that was placed on the notion that pricing oil in another currency than U.S. dollars was really the thin end of the wedge which will lead to a phasing out of the greenback's role as the...

Some sage gold watchers are expecting a major $ devaluation before the end of the year! Some say it could be any day now. Certainly the fundamentals have pointed that way, as we have discussed for some time now, this despite the repeated "Strong $ Policy" statement from this and the last Administration. The concept is no doubt alarming and implies a radical change in global economics.

A Lesson In Super Sovereign Currencies: An End To The MOPE and SPIN Posted: Jul 11 2009 By: Jim Sinclair Post Edited: July 11, 2009 at 4:52 pm Filed under: General Editorial Dear CIGAs, Of course the world is not going to replace the dollar as a reserve currency immediately, or for that matter ever. What is going to happen is the IMF or an Asian entity will formulate a basket of currencies and possibly gold into a unit much like the USDX. There will be an issuing agent and much like the SDR it will be an accounting unit...

Russia is proposing the inclusion of the ruble, yuan and gold as a part of a revised basket of currencies to form the valuation of the IMF’s special drawing rights seen as the coming new alternative global reserve currency, reported AP. At a summit meeting yesterday, Russia and China challenged the reserve currency status of the dollar with two initiatives, while at the same time professing their support for the greenback in which both countries have huge bond holdings. Gold for SDRs China is to extend a $10 billion loan to a regional group that comprises Russia and four central...

China does not manipulate renminbi exchange rate During an economist dialogue event held on May 11, Paul Krugman, the 2008 Nobel Economics Prize winner claimed that China's huge trade surplus is the result of government intervention and the world cannot continue to accept such tremendous trade deficit caused by China. Long Yongtu, Secretary General of the Boao Forum for Asia, responded by saying that China should not be criticized for its huge trade surplus. China blamed for trade surplus Krugman argued that China's huge trade surplus is a result of government policies and the deficit would not run this high...

China fears bond crisis as it slams quantitative easing China has given its clearest warning to date that emergency monetary stimulus by Western governments risks setting off worldwide inflation and undermining global bond markets. By Ambrose Evans-Pritchard Last Updated: 1:13PM BST 07 May 2009 Comments 5 | Comment on this article "A policy mistake made by some major central bank may bring inflation risks to the whole world," said the People's Central Bank in its quarterly report. "As more and more economies are adopting unconventional monetary policies, such as quantitative easing (QE), major currencies' devaluation risks may rise," it said....

Gov. Deval Patrick has stashed four staffers in big-bucks jobs at several of the quasi-public agencies he is now vowing to reform - including one post worth a jaw-dropping $190,000 a year, the Herald has learned. Patrick ordered up a probe of salaries at quasi-public agencies last week as taxpayer outrage peaked over his tapping of Sen. Marian Walsh for a long-vacant $175,000-a-year post with the Massachusetts Health and Educational Facilities Authority. But four Patrick administration staffers have landed at quasi-public agencies:

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The Fed's announcement last week to flood the financial markets with $1.2 trillion in new money stunned many. True, governments often print money as a cheap way to buy off their debt. Governments also find that instead of paying off their debt they can simply reduce the value of the currency so much that earlier debts are not worth anything. But the shear size of the current change to the world's preeminent currency is unprecedented. More money means that each dollar falls in value and can purchase less than it did previously. Think of it this way: If the number...

The flood of US dollars seems to be coming, as well as inflation. The Federal Reserve started buying massive amounts of Treasuries and is gearing up its purchases of mortgage debt. The Fed will buy as much as $300 billion in long-term Treasurys in the next six months. It will increase its purchases of mortgage-backed securities...

What’s coming next, from the ‘Man Who Saw It Coming’ Posted by Gwen Robinson on Feb 23 18:31. The litany of dire predictions for currencies, commodities and the global economy in general not only seems endless - it is getting more predictable by the day. That is because few pundits are making any waves - or money - out of playing Pollyanna, as everyone from Jim Rogers to Nouriel Roubini well know. While it’s an increasingly safe bet for analysts to leap on the gloom’n'doom bandwagon, there are a handful of analysts out there who get taken more seriously than...

Ruble Collapse Brings Wages Back to Earth 16 January 2009 By Courtney Weaver / Staff Writer The days of spectacular wage growth that made Moscow an international employment destination have come to an end, economists say, with layoffs throughout the economy letting employers bring salaries back in line with productivity growth. The earnings cuts, alongside inflation and the weakening ruble, have dealt Russian wage earners a triple whammy, and the Central Bank's devaluation of the currency Thursday brought it past the 32 mark against the dollar for the first time since the 1998 redenomination (Story, Page 7.) Over the past...

Will China lead the world into depression? Posted By: Ambrose Evans-Pritchard at Jan 15, 2009 at 13:27:42 Oh no! Albert Edwards at Societe Generale has issued another terror alert: Sell everything. Hide in a bunker with plenty of whisky. The S&P 500 index of US shares is about to crash through its half-century support line to 500. "Technicals say it is time to bail out. Cut equity expose and prepare for rout. US depression looking likely. While China's 2009 implosion could get ugly." Mr Edwards -- who is of an "Austrian" persuasion, ie hates excess debt -- was one of...

Chinese demand a wobbly bulwark By Robert M Cutler MONTREAL - China's economy requires a minimum annual growth rate of 8% to maintain production levels sufficient to prevent unemployment from increasing, according to a general consensus inside and outside the country. Until recently, collective wisdom held that such a level of growth was likely to be maintained through 2009, easing the threat of social unrest as migrants, newly qualified university students and less-skilled school-leavers struggle to find work, while cushioning the global impact of declining demand for industrial metals and related natural-resource commodities. No longer. China increasingly appears no more...

Wednesday, December 31, 2008 Groundwork for Trade Conflict Being Laid? We have worried out loud that the policy remedies being pursued by the US amount to trying to restore the status quo ante to as great a degree as possible, particularly in trying to resturn US overconsumption to something approaching its former levels. Although it may be difficult to work two agendas, crisis response and addressing the root causes of our economic mess in parallel, focusing solely on the former runs the considerable risk of that we will see only a shallow recovery, with many of the elements of the...

President-elect Barack Obama has made a big mistake that, as usual, the mainstream media has given him a pass on by not making a big deal about it. It’s not his cabinet nominations, which the mainstream media are all gushy about. It’s not whether he or any of his staff can be linked to the sale of his Illinois Senate seat by “caught red-handed but I didn’t do it” Gov. Rod Blagojevich. And it is certainly not who Obama has chosen to pray at his inauguration. It’s his inauguration for peace sake! “We can’t worry, short-term, about the deficit” is...

China's currency falls by record against U.S. dollar Decline may signal official policy shift towards devaluation, analysts say By Chris Oliver, MarketWatch Last update: 6:34 a.m. EST Dec. 1, 2008 HONG KONG (MarketWatch) -- China's currency staged a record loss against the U.S. dollar Monday, falling to the lower end of its daily trading limit, in what some analysts said is a policy shift as authorities let the yuan depreciate against the greenback in an effort to help bolster the decelerating economy. The yuan eased to 6.8848 against the dollar, falling to its 0.5% trading limit, its lowest level since...