Ambrose Evans-Pritchard gently dismisses yesterday's Robert Fisk report about secret meetings between the Chinese and Arabs seeking to end dollar hegemony ... but he explains why the end of the dollar's hegemony is happening anyway. Excerpt:
What matters is where OPEC oil producers and rising export powers choose to invest their surpluses. If they cease to rotate this wealth into US Treasuries, mortgage bonds, and other US assets, the dollar must weaken over time."Everybody in the world is massively overweight the US dollar," said David Bloom, currency chief at HSBC. "As they invest a little here and little there in other currencies, or gold, it slowly erodes the dollar. It is like sterling after World War One. Everybody can see it's happening."
"In the US they have near zero rates, external deficits, and public debt sky-rocketing to 100pc of GDP, and on top of that they are printing money. It is the perfect storm for the dollar," he said.
Natural forces, in other words.
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Pyrrho, I am so glad to see you back on the board. I've been wonder....
And I agree, all this inflationary talk ignores the rest of the world. I seems to assume that everyone else has their economic act together and only the US is flailing and it's all Obama's fault....which is ridiculous. It perfectly suits the Limbaughs of the air waves who are quick to forget who got made this mess in the first place.
I am glad to see all these intelligent voices back on this blog.
Thank you from a member of the ignorant masses...
Thanks, Shelley. It must have been neat to meet Rod this past summer!
Wow, as if on cue, Mish has posted this:
The Chinese central banks' printing and respective Chinese bank lending make us look like amateurs. Chinese central bank assets and the money supply are up 25-26% annualized YTD...
Meanwhile, back in the US, total bank credit is contracting while M2 is up 5% annualized YTD.
I hope we can put to rest the idea that the Chinese are managing their currency better than we are ours.
This should be a block quote:
Pyrrho, what does this signal for Communist China? Hyperinflation? Admittedly, Red China has the present economic capacity to withstand a 25% money supply increase annualized YTD. But if it continues??
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