Dollar // Current

China to US: Is That a Hedge or Are You Just Happy to See Me?

Yep. Cash4Gold is being run by Uncle Sam ...

WallStCheatSheet
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3 days ago
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The Digital Coin and self-issued credit

A comprehensive & innovative proposal for a new system of sustainable economics.... more

sespian
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3 days ago
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Surprise surprise, we're still in a recession!

The UK economy unexpectedly contracted by 0.4% between July and September, according... more

CarolineS
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6 days ago
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1 comment

Rupee gains to near 1-month high on stocks

The rupee rose to its highest in nearly a month on Monday tracking higher regional... more

eva2
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7 days ago
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Peter Schiff “Gold Could Hit $5000/Everything Government Is Doing Weakens The Dollar”

9/17/2009 Fox Business Peter Schiff discusses Gold prices and the inflationary... more

shanklinmike
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12 days ago
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Soros: China Will Lead New World Order

October 23, 2009 ·
Billionaire globalist George Soros told the Financial Times during an interview that China will supplant the United States as the leader of the new world order and that America should not resist the country’s decline as the dollar weakens, living standards drop, and a new global currency is introduced.

Asked what Obama should discuss when he visits China next month, Soros stated, “This would be the time because I think you really need to bring China into the creation of a new world order, financial world order,” adding that China was a reluctant member of the IMF who didn’t make enough of a contribution.

“I think you need a new world order that China has to be part of the process of creating it and they have to buy in, they have to own it in the same way as the United States owns…the current order,” said Soros, adding that the G20 was a move in this direction.

Soros said that there was a flight from currencies across the board, and that this is why the price of commodities, notably gold and oil, were generally rising. He also stated that an orderly decline of the dollar was “desirable” and that the entire system needed to be reconstituted towards a global currency.

“You need a new currency system and actually the Special Drawing Rights do give you the makings of a system and I think it’s ill-considered on the part of the United States to resist the wider use of Special Drawing Rights, they could be very useful now when you have a global shortfall of demand, you could actually internationally create currency through Special Drawing Rights,” said Soros, explaining that this was already in process after the IMF injected an allocation of Special Drawing Rights (SDRs) equivalent to $250 billion into the global economy.

Soros also stated that richer countries were already transferring wealth to poorer countries via SDR’s, with the IMF paying for the half per cent transaction cost.

Soros said the world would have to go through a “painful adjustment” following the decline of the dollar and the introduction of a global currency. Reading between the lines, he essentially threatened to kill the dollar completely if the United States did not get on board with the global currency.

Soros predicted that China would become the new engine of the global economy, replacing the U.S., and that this would slow economic growth and reduce living standards. Soros characterized the United States as a drag on the global economy because of the declining dollar.October 23, 2009 · Billionaire globalist George Soros told the Financial Times... more

rodstradamus
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23 days ago
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Stripper is no dummy

A 50 year old man was caught using counterfit bills to pay a stripper. She said she... more

JuJubeez
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1 month ago
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Year After TARP: $700 Billion Down the Drain

TARP, the Troubled Asset Relief Program, is a year old now. On September 19, 2008,... more

shanklinmike
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1 month ago
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4 comments

Embrace the dollar's downfall?

Article by Dean Baker:
Most of the economists and pundits who could not see an $8tn housing bubble are telling us that the United States desperately needs the Chinese government to keep buying its debt. This crew of failed analysts argues that without the support of the Chinese government, interest rates in the US will rise, choking off the recovery. In reality, the decision by China to stop buying US government debt might not harm the economy's recovery, but it could be devastating to the recovery efforts at Citigroup and other basket-case banks.

The basic logic is simple. China's central bank has been buying up huge amounts of dollar-based assets for the last decade. Their purchases include short- and long-term government debt, mortgage-backed securities and, to a lesser extent, private assets.

The Chinese central bank's purchases have two effects. First, they help to keep interest rates low. This supports economic growth by keeping down the interest rates on mortgages, car loans and other borrowing that boosts demand.

The other effect of China's purchase of dollar-based assets is that it keeps down the value of its currency against the dollar. This is the famed currency "manipulation", that draws frequent complaints from politicians. Of course, it is not exactly manipulation. China has an explicit policy of keeping down the value of its currency against the dollar. It is not buying up hundreds of billions of dollars of US assets in the dark of night. It does it in broad daylight in order to keep its currency at the targeted rate.

Suppose China stopped buying up US government debt. Interest rates in the US would rise, which would have some negative impact on growth. Of course, the Fed could try to offset this rise in rates by simply buying more debt itself. It has already been buying debt, and it could simply buy enough to replace the lost demand from China. This would leave interest rates largely unchanged.

Suppose that the Fed doesn't intervene and lets interest rates rise. This will have some negative impact on growth, but there will also be a very positive side from China's decision to stop buying dollars. The dollar would fall in value against China's currency. This would make Chinese goods more expensive in the United States, leading US consumers to purchases fewer imports from China and more domestically produced goods.

...More...Article by Dean Baker: Most of the economists and pundits who could not see an $8tn... more