Wednesday, November 10, 2010
What currency crisis?
The Death Of The Dollar? 11 Signs That We Could Be On The Verge Of A Global Currency Crisis
The following are 11 signs that we could be on the verge of the death of the U.S. dollar and of a global currency crisis....
#1 China's leading credit rating agency has downgraded U.S. debt to "A" in the aftermath of last week’s announcement of a second round of quantitative easing by the Federal Reserve.
#2 Top finance officials from China, Russia, Germany, Brazil and many other countries all over the globe are expressing anger over the decision by the Federal Reserve to initiate another round of quantitative easing. A number of key exporting nations are now evaluating whether or not they should devalue their own currencies in retaliation.
#3 Alarmingly high sovereign debt levels in Ireland, Portugal and Spain are raising fears that the euro is set for another significant tumble.
#4 Investors are flocking to precious metals as they become disillusioned with paper currencies. On Tuesday, gold closed at $1,409.80 an ounce on the New York Mercantile Exchange, and silver soared to a 30-year high of $28.46 an ounce before moving back down a bit.
#5 It isn't just precious metals that are exploding in price. Virtually every major commodity has been skyrocketing in price in 2010, and things only accelerated once the Federal Reserve announced this new round of quantitative easing. Some analysts fear that this commodity bubble could put significant inflationary pressure on economies across the globe.
#6 The head of the Federal Reserve Bank of Dallas is admitting that for at least the next eight months, the Federal Reserve is going to be monetizing U.S. government debt.
#7 One top Citibank official has publicly declared that he believes that central banks around the globe are going to start dumping U.S. dollars in the coming weeks.
#8 Earlier this year, Japan publicly intervened in the foreign exchange market for the first time since 2004. Japan's stunning 12 billion dollar move to push down the value of the yen made headlines all over the world.
#9 Even economies that are on a relatively solid footing are openly attempting to manipulate currency rates in 2010. For example, the Swiss National Bank experienced losses equivalent to about 15 billion dollars trying to stop the rapid rise of the Swiss franc earlier this year.
#10 Things have gotten so desperate that World Bank President Robert Zoellick is actually proposing that the world's biggest economies should consider using gold as an indicator to help set foreign exchange rates.
#11 Unfortunately, the financial problems of the U.S. government look like they are only going to get worse. According to the Wall Street Journal, in order to repay maturing bonds and finance the budget deficit, the U.S. government will have to borrow 4.2 trillion dollars over the next year. If other nations decide that they are tired of the games and that they are going to stop lending so much money to the U.S. government, where will all that money come from? Would the Federal Reserve step in and monetize most of it?