Central Banks seem to be dumping the dollar

[McKenzie]

The fact that the world's Central Banks are not actually buying dollars is interesting...

<snip>

Experts say it's difficult to say with certainty to what extent the shift is under way. Central banks often don't give out such information. But a survey last month by Central Banking Publications showed many central banks have increased the share of their reserves held in euros. They may not be actually selling dollars - just buying fewer dollar assets, such as United States government bonds, and more bonds denominated in other currencies. That's bad enough news for the dollar.

<snip>

http://www.atimes.com/atimes/Global_Economy/GB26Dj01.html

[Gman]

1. I've been thinking for a couple of years now

that the Bushco is up to something in currency that is probably on such a grand scale, it would be beyond anyone's imagination to actually realize they are doing it. I feel their scheme involves letting the dollar sink to third world currency status.

[DU_ONE]

2. Do You Buy This?

From the article:

"Malcolm Sawyer, an economics professor at Leeds University, said that's still a long way off.

"I can see a time, maybe 10-20 years hence, when the euro and the dollar will have equal status, but I think that is really some time off," Sawyer said.

"We are still in a position where much trade is financed through dollars and many things like oil are priced in dollars, which is also widely accepted in many countries in the world. So I think that for a long time, the preeminence of the dollar will continue, although given the euro's rise, it won't be quite as preeminent as it has been."


"...maybe 10-20 years hence..." - think it will take that long? Could it happen in a year?

[Gman]

4. I don't think it could happen in a year

but there could be very serious problems in 3-5 years if the pace accelerates.

[Hugin]

3. A real Snow Job...

They are dropping the dollar to make the stock
numbers higher. A DOW 10800 looks real good for
re-election.

Too bad it's all in highly worthless dollars.

If RoveCo is involved... It's all about perception
and re-election. Believe me.

[Tux]

5. Seems

Like Bush et al want to collapse the economy and blame liberals, gays, pagans, other non-Christians, free thinkers, Democrats, et al so they can recreate society as a Christian theocracy to bring Jesus back to Earth and punish us for our "sins".

Just read the Book of Revelation (was raised Protestant) and you'll see the end game Christians hope for. I live in the Bible Belt where they say Jesus needs to return to save us from evil of liberals, etc.

[kk897]

7. Gman: I'm interested... what do you think *they* think will happen

by letting the dollar sink to third world currency status? Or do you think that maybe the major Bushco players are investing in other currencies, so that they hope to even further enrich themselves at the cost of millions of people's wellbeing?

[Fovea]

8. *they* are using the Grover Norquist strategy

against us. They are going to starve the beast, that is to say our economy, of the credit and currency strength that allows us to do the things they disagree on.

And regarding BushCo, I think Milton said it best in Paradise Lost...

"Better to reign in hell, than serve in Heaven."

[Gman]

10. I see this playing out as

reducing the U.S. to the level of like a Brazil but there is still some industry but with cheap labor. Where there are huge differences between the haves and have nots. Where there is a much reduced middle class. Reasons for this include the high cost of labor in the United States but also the great potential of emerging markets, primarily China. Goods don't have to be produced in the US for US entrepreneurs to make money if they have the capital.

We talk about the trade deficit, which is the difference between what we export and import. We don't take into account in this figure that many of the dollars that flow offshore actually flow back to US based multinational corporations because those imported goods are made by these US multinational corporations with cheap foreign labor. Every time we import car parts from Mexico that goes against the trade deficit, but the dollars go to GM or whoever here in the US.

While the US is still a tremendous market, there is an even greater market, by many times over in the new emerging markets. I think that, ultimately, their game plan is to reduce American wages and economic status to a cheap labor country while taking advantage of the even greater potential of the emerging markets.

While they do all this, they are investing in Euros. Hell, even Saddam was buying Euros before we invaded. If they can push the Euro to being the premier currency then they not only profit from the increased value, but the very weak dollar coupled with cheap American labor means cheaply (expense wise) made products with wages paid in low value American dollars turn around and bring high value Euros.

And, of course, a big part of this is huge tax reductions for corporations and the rich here in the U.S. The U.S. would in effect become a tax haven.

Does this make sense??

[kk897]

11. Gman--yes, it makes sense...

...horrible sense. Sigh.

The thing is, foreign product manufacturers are now starting to sell their *own* products here in the US. So, rather than, say American Company Toasters, made in China but profits to American Company, it will soon be China Company Toasters, made in China and profits to China Company.

(I only know about this because I recently interviewed a CEO of a product design firm that does business all over the world, and he's really worried... he doesn't see the situation improving anytime soon, either).

I suppose it will be somewhat ironic if China becomes the new US--the big consumer culture, where workers are paid better than anywhere else. Unfortunately, if that comes to pass, there will be no Americans who will be able to appreciate that irony, because they'll be more worried about feeding their families than pondering the state of the world economy.

[natrat]

9. probably sold the dollar short w/ our money

[indepat]

6. Imagine the impact should the dollar be allowed to seek it true value

conisdering the monstrous twin deficits.