Portrait of a Traitor ...

[ViRedd]

Right out of Saul Alinsky's play book:

Dollar loses reserve status to yen & euro

By PAUL THARP
Last Updated: 3:16 AM, October 13, 2009
Posted: 1:44 AM, October 13, 2009

• Ben Bernanke's dollar crisis went into a wider mode yesterday as the greenback was shockingly upstaged by the euro and yen, both of which can lay claim to the world title as the currency favored by central banks as their reserve currency.

Over the last three months, banks put 63 percent of their new cash into euros and yen -- not the greenbacks -- a nearly complete reversal of the dollar's onetime dominance for reserves, according to Barclays Capital. The dollar's share of new cash in the central banks was down to 37 percent -- compared with two-thirds a decade
ago.

Fed boss Ben Bernanke may be forced to raise rates in order to restore faith in the dollar — and help bring the euro and the yen back to earth.




Currently, dollars account for about 62 percent of the currency reserve at central banks -- the lowest on record, said the International Monetary Fund.

Bernanke could go down in economic history as the man who killed the greenback on the operating table.
After printing up trillions of new dollars and new bonds to stimulate the US economy, the Federal Reserve chief is now boxed into a corner battling two separate monsters that could devour the economy -- ravenous inflation on one hand, and a perilous recession on the other.

"He's in a crisis worse than the meltdown ever was," said Peter Schiff, president of Euro Pacific Capital. "I fear that he could be the Fed chairman who brought down the whole thing."

Investors and central banks are snubbing dollars because the greenback is kept too weak by zero interest rates and a flood of greenbacks in the global economy.

They grumble that they've loaned the US record amounts to cover its mounting debt, but are getting paid back by a currency that's worth 10 percent less in the past three months alone. In a decade, it's down nearly one-third.

Yesterday, the dollar had a mixed performance, falling slightly against the British pound to $1.5801 from $1.5846 Friday, but rising against the euro to $1.4779 from $1.4709 and against the yen to 89.85 yen from 89.78.

Economists believe the market rebellion against the dollar will spread until Bernanke starts raising interest rates from around zero to the high single digits, and pulls back the flood of currency spewed from US printing presses.

"That's a cure, but it's also going to stifle any US economic growth," said Schiff. "The economy is addicted to the cheap interest and liquidity."

Economists warn that a jump in rates will clobber stocks and cripple the already stalled housing market.

"Bernanke's other choice is to keep rates at zero, print even more money and sell more debt, but we'll see triple-digit inflation that could collapse the economy as we know it.

"The stimulus is what's toxic -- we're poisoning ourselves and the global economy with it."

 

[CrackerJax]

Well, they are just reading the smoke signals coming from TEAM OBAMA. Heck, I can't blame the banks for doing what I have already done....

I think the dollar has the potential of halving the Euro.

 

[Joe Camel]

STOP PRINTING MONEY !

The value of our Dollar today is pathetic.
I hope My kids and future grand kids don't have to read in history books, How their was this great country called America.

Kids will say Grand Papa What was life like before the Amero ????

 

[Green Cross]

Do anyone have any doubt that Obama will risk bankrupting the entire nation, in order to get elected again?

I figure once things turn sour they'll throw Bernanke under the bus, and do away with the US dollar, but I hope I'm wrong.

It's frightening to think about what can happen if the rest of the world decides to stop supplementing washington's spending addiction.

I'm sure the German's after WW1 didn't think their currency would become worthless, any more than Americans do, but here's a reality check.

This is a picture of a woman feeding money into the furnace to keep warm, because it was much cheaper than the amount of wood they could buy with that same paper.

There’s some pretty wild anecdotes about post World War 1 Germany. Families would have to meet their breadwinners at the factory at noon with wheelbarrows ready to catch the morning’s pay so they could rush and buy the daily dinner before prices could change and they couldn’t afford even a loaf of bread. There are also pictures of people (see the one on the left) burning money in stoves to keep warm in the winter since that was cheaper than using the money to buy fuel for the stove. Hyperinflation is inflation that reaches the triple digits annually. Zimbabwe had to stop calculating its inflation rate once it hit triple digits daily! These are both extremes, but there are examples in Latin America and other African nations that show how disrupted an economy can become when money is poured into an economy that is not producing anything to buy. I had a student from Argentina tell me that his parents tell the story of when they had to ensure they had established a price on dinner before they ate or the price would change during the meal. I’ve also heard similar stories from students from Uganda who returned there over breaks.

Bloomberg.com reports that there are some people suggesting that inflation in the U.S. will not only go up, but will basically go up at levels that we’ve never experienced before in this country.

The U.S. economy will enter “hyperinflation” approaching the levels in Zimbabwe because the Federal Reserve will be reluctant to raise interest rates, investor Marc Faber said.
Prices may increase at rates “close to” Zimbabwe’s gains, Faber said in an interview with Bloomberg Television in Hong Kong. Zimbabwe’s inflation rate reached 231 million percent in July, the last annual rate published by the statistics office.
“I am 100 percent sure that the U.S. will go into hyperinflation,” Faber said. “The problem with government debt growing so much is that when the time will come and the Fed should increase interest rates, they will be very reluctant to do so and so inflation will start to accelerate.”
​

This is not a widely held view, however, you’re beginning to hear more and more folks wondering if and when Bernanke will begin to apply breaks to his current policy of Quantitative Easing. As of right now (7/27/09 and 3:30 pm CDST) gold is sitting neutral at 953. That would indicate a market that isn’t too worried about the prospect of hyperinflation yet and it does appear that most of the short term rates the Fed watches and targets will continue to hover near zero.
Edward Harrison of Credit Writedowns had the same thought earlier.

Just last week, I made similar comments in my post, “More thoughts on the fake recovery.”
In my view, the Federal Reserve has effectively demonstrated it is willing to risk hyperinflation in order to beat back the deflationary forces.
But I was using hyperbole. Faber, however, is dead serious. It is the secret desire of the Fed to want inflation that has U.S. government bond yields going berserk. But, most people are not expecting hyperinflation in the United States ever.
​

I have a difficult time believing that Bernanke or any one around our age that entered banking specialties during the Volcker years would ever want a repeat of that recession it took in the 1980s to wring out the persistent double digit inflation occurring at that time. The dollar is way too dominant in the currency markets as a safe haven to even risk a return of inflation rates to the high single digits. However, I have seen things occur recently that were beyond my imagination even last year so I’m not prepared to rule anything out. Only to say that I find it highly improbable that the Federal Open Market Committee (FOMC) will monetize the debt the way it did in the 1960s and 1970s.
I will add one thing that plays on my mind when I calculate those probabilities. That is the potential for President Obama to find a more pliable Federal Reserve Chair. While the appointments to the FOMC have extremely long terms or are Fed Presidents, the Chair serves a shorter term. We do have historical precedent for appointing Fed Chairs that behave more politically. Ronald Reagan, during his first term, tried to remove Chairman Volcker because the recession was seriously hurting his chances of a second term. Wall Street and the banking industry, at that time, were not close to the POTUS and made it clear they wanted Volcker to stay. Reagan complied and had the luck of the Irish in timing as the recession turned the corner in time for him to claim “morning again in America”. I’m not quite so sure we’d see this play out similarly with the current Administration.So, right now I’ll commit to saying I find it unlikely we see hyperinflation but those probabilities could change with a few twists and turns in the beltway.
One of the biggest indicators for me will be the level of unemployment come the next election cycle. If inflation cycles begin, you can historically find them starting about six months before a possibly uncomfortable unemployment rate. This is especially true of Democratic administrations since they’ve been much more likely to be concerned about unemployment rates because of the make up of their constituencies. However, only time will tell given this administration’s close relationship with the financial industry and other business interests.
While most of these hyperinflation articles have shown up in typical business sites, I was surprised to find this recent blog post by Sheldon Filger on HP.

Massive quantitative easing by the Fed is pouring trillions of U.S. dollars into the money supply, essentially conjured out of thin air. This is being done without transparency, the rationale being that frozen credit markets require a vast expansion of the money supply in an attempt to get the arteries of commerce flowing again. Similarly, the U.S. government is spending vast amounts of money it does not have, with the Treasury Department selling unprecedented levels of government debt in a frantic effort to fund the wildly expanding U.S. deficit. These two forces, quantitative easing and multi-trillion dollar deficits, are the core ingredients of an explosive fiscal cocktail that I believe will ultimately lead to hyperinflation.
​

This is a really interesting read. He obviously has set high odds that the FED will become obliging and this is his rationale.

What is most frightening about the policy moves being enacted by the Fed and Treasury is that their actions may not be a reckless gamble after all. They may have come to the conclusion that only hyperinflation will enable the United Sates to avoid national insolvency. In effect, they may be pursuing the exact opposite course undertaken by Paul Volcker in the early 1980’s. If that is their prescription for the dire economic crisis confronting the U.S., then one must conclude that Ben Bernanke, Timothy Geithner and Larry Summers have learned nothing from history. Once the spigot of hyperinflation is tuned on, it becomes a cascading torrent that is almost impossible to switch off, and which in its wake inflicts inconceivable levels of economic, political and social devastation. Before it is too late, President Obama should put the brakes on his economic team’s dangerous gamble with the haunting specter of hyperinflation. If he fails to act in time, a hellish prospect may be his economic and political legacy.

Link
​

 

[ilkhan]

I hear that Joe.
But we still have these simpletons squalling for more government spending.

Bad man, cheats.
Bad men coun-ter-fits.
Steals your mon-ey.
Ok simple-tons.
Bad man, Put us in bread lines.
Bad men, loot Amer-ica.
Wipe your bo-bo with worth-less green paper, Ok.
Get your flu shot.

God help us.

 

[jrh72582]

Well, they are just reading the smoke signals coming from TEAM OBAMA. Heck, I can't blame the banks for doing what I have already done....

I think the dollar has the potential of halving the Euro.

Yes, we get it - you're rich. I'm very proud of you. Want a cookie?

I love how you always sway the debate from other topics to yourself. There's always an "I" in your claims. I love it!

 

[ilkhan]

Ok I get it your a liberal professor.
You tell us all every chance you get.

But I feel you,
CJ seems very pleased with himself.

 

[jrh72582]

Ok I get it your a liberal professor.
You tell us all every chance you get.

But I feel you,
CJ seems very pleased with himself.

Do I now? I believe I've mentioned it a maximum of five times in all my posts over the years I've been on here. And the only reason I mentioned it was because my ethos was under attack. I was merely working to counter the criticisms.

But think what you want - no worries here. I'm back in spectator mode, with sparse participation. So flame on...

 

[RickWhite]

Yes, we get it - you're rich. I'm very proud of you. Want a cookie?

I love how you always sway the debate from other topics to yourself. There's always an "I" in your claims. I love it!

Typical Liberal low-brow comment.

 

[CrackerJax]

I am pleased with myself.... why wouldn't I be? I saw Obama coming (I warned everyone). I saw the real estate market implosion months ahead and sucked the equity OUT of my properties at low rates and while ppl were losing all thier equity, I was piled high in oil and Potash fert stocks. I saw the coming deluge on the dollar and I adjusted.

I'm not glad anybody who didn't make the right moves is about to become trapped. I have however, posted months ago of what you can do even now to protect urself.

I'm not smug..... confident.

I also spend a good deal of my time studying events. No, not on Salon or Fox.

 

[PeachOibleBoiblePeach#1]

Remeber this, Obama. came in one of America's most difficult economic disasters, It's easy to point fingers at a specific person or Party and blame them!,,I seen this coming long before obahma,,and I was doing the same thing preparing myself. Stop with all this LIberal BS and come up with a solution PEOPLE,,or is that to communistic for some of YOU>

 

[CrackerJax]

It's his solutions which are dragging the country down... his polls remained high until the ppl started to wake up to his policies....now they are in a steady drop and mistrust is going up up up. having that particular Congress is his worst enemy. His own party is helping to sink him.

 

[ViRedd]

I expect some sort of civil unrest within a year. Most Americans aren't violent, but love freedom and liberty. Perhaps a major tax revolt?

 

[PeachOibleBoiblePeach#1]

It's his solutions which are dragging the country down... his polls remained high until the ppl started to wake up to his policies....now they are in a steady drop and mistrust is going up up up. having that particular Congress is his worst enemy. His own party is helping to sink him.[/QUOTE] Yea, Must be tough to play the greenspan Puppet

 

[PeachOibleBoiblePeach#1]

I expect some sort of civil unrest within a year. Most Americans aren't violent, but love freedom and liberty. Perhaps a major tax revolt?

No, You pray for that

 

[Wordz]

No, You pray for that

for sure nobodies gonna do shit. there just gonna bitch and moan until a white person is president again.

 

[budsmoker87]

No, You pray for that

it's already happening

 

[PeachOibleBoiblePeach#1]

it's already happening

Well let's see, Then the forign terrosits have there way another civil war aye Wake UP

 

[CrackerJax]

Oh...now he's concerned about the terrorists. Obama fiddles while Afghanistan and Pakistan stand on the verge of a greatly expanded war.

You can't butter both sides of the bread.

 

[ViRedd]

for sure nobodies gonna do shit. there just gonna bitch and moan until a white person is president again.[/QUOTE]

So, what's up with that comment? Why the racism?