If a tree falls in a forest and no one is around to hear it, does it make a sound?
The tension between Central Banks that we noted continues to worsen.
This time it was China and the EU, not just Germany, that fired warning shots at the US Fed.
A senior Chinese official said that the United States should cut back on printing money to stimulate its economy if the world is to have confidence in the dollar.
So first Germany begins pulling its Gold reserves from the US, and now China and the EU are saying publicly that the Fed’s policies are damaging confidence in the US Dollar.
This does not bode well for the financial system. The primary role of Central Banks is to maintain confidence in the system.
If the Central Banks begin to turn on one another it is only a matter of time before the system breaks down.
Dark times lie ahead for the U.S. dollar as its future as the world's reserve currency looks to be in great jeopardy.
But the times are changing and many of these nations, with China at the forefront, are finalizing trade agreements that utilize only their own currencies.
China is actively working with nations in Asia, the Middle East and other regions of the world to bring dramatic changes
to the way world commerce is conducted and money is exchanged.
Many of these countries who are moving away from the dollar no longer view America as a stable and reliable force on
the world economic stage and they are seeking alternatives as a hedge against a severe future decline in the dollar's value.
*China and Japan announced plans to bypass the dollar and use their own currencies in their trade relations.
Discussions involving a partnership between South Korea and China to exchange their currencies also have taken place.
This is a huge development as China, Japan and South Korea are the dominant economic powers in that Asian region
*Russia and Iran have agreed to use rubles as a means of currency in their trades. Russia has joined China in opposing U.S.
sanctions against Iran and fully intends to maintain a close relationship with Iran.
*China will pursue bilateral trades with Russia and Malaysia using the yuan, the ruble and the ringgit, respectively.
*The nations comprising the BRICS group (Brazil, Russia, India, China and South Africa) recently agreed at their summit meeting in Sanya, China, to establish mutual lines of credit in local currencies. This, again, is a very significant development
since this group of nations represents a very powerful economic bloc going into the future.
*The International Monetary Fund (IMF) recently issued a statement about replacing the dollar as the world's reserve currency with a system of Special Drawing Rights called SDR's, an international type of currency created in 1969 which is, in effect, a "basket of national currencies" backed by the full faith and credit of the member countries' governments.
Remember, every time the Fed debases the US Dollar it forces the Euro and other currencies higher, hurting those countries’ exports.
The Fed has recently announced it will be printing $85 billion every month until employment reaches 6.5%
Expectations of an end to ultra-easy U.S. monetary policy are likely to set in during the second-half of 2013, triggering a bull run in the dollar that could last for five years, says independent economist Andy Xie.
And this, he argues, could lead to a "crisis" in emerging markets as hot money inflows unwind.
The U.S. economy has begun to show signs of life again - with factory activity touching a nine-month high in January -
prompting talks about an end to the Federal Reserve's quantitative easing program.
Sources:(Reuters)(CNBC)
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The tension between Central Banks that we noted continues to worsen.
This time it was China and the EU, not just Germany, that fired warning shots at the US Fed.
A senior Chinese official said that the United States should cut back on printing money to stimulate its economy if the world is to have confidence in the dollar.
So first Germany begins pulling its Gold reserves from the US, and now China and the EU are saying publicly that the Fed’s policies are damaging confidence in the US Dollar.
This does not bode well for the financial system. The primary role of Central Banks is to maintain confidence in the system.
If the Central Banks begin to turn on one another it is only a matter of time before the system breaks down.
Dark times lie ahead for the U.S. dollar as its future as the world's reserve currency looks to be in great jeopardy.
But the times are changing and many of these nations, with China at the forefront, are finalizing trade agreements that utilize only their own currencies.
China is actively working with nations in Asia, the Middle East and other regions of the world to bring dramatic changes
to the way world commerce is conducted and money is exchanged.
Many of these countries who are moving away from the dollar no longer view America as a stable and reliable force on
the world economic stage and they are seeking alternatives as a hedge against a severe future decline in the dollar's value.
*China and Japan announced plans to bypass the dollar and use their own currencies in their trade relations.
Discussions involving a partnership between South Korea and China to exchange their currencies also have taken place.
This is a huge development as China, Japan and South Korea are the dominant economic powers in that Asian region
*Russia and Iran have agreed to use rubles as a means of currency in their trades. Russia has joined China in opposing U.S.
sanctions against Iran and fully intends to maintain a close relationship with Iran.
*China will pursue bilateral trades with Russia and Malaysia using the yuan, the ruble and the ringgit, respectively.
*The nations comprising the BRICS group (Brazil, Russia, India, China and South Africa) recently agreed at their summit meeting in Sanya, China, to establish mutual lines of credit in local currencies. This, again, is a very significant development
since this group of nations represents a very powerful economic bloc going into the future.
*The International Monetary Fund (IMF) recently issued a statement about replacing the dollar as the world's reserve currency with a system of Special Drawing Rights called SDR's, an international type of currency created in 1969 which is, in effect, a "basket of national currencies" backed by the full faith and credit of the member countries' governments.
Remember, every time the Fed debases the US Dollar it forces the Euro and other currencies higher, hurting those countries’ exports.
The Fed has recently announced it will be printing $85 billion every month until employment reaches 6.5%
Expectations of an end to ultra-easy U.S. monetary policy are likely to set in during the second-half of 2013, triggering a bull run in the dollar that could last for five years, says independent economist Andy Xie.
And this, he argues, could lead to a "crisis" in emerging markets as hot money inflows unwind.
The U.S. economy has begun to show signs of life again - with factory activity touching a nine-month high in January -
prompting talks about an end to the Federal Reserve's quantitative easing program.
Sources:(Reuters)(CNBC)
HOME