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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.
Currently, dollars account for about 62 percent of the currency reserve at central banks -- the lowest on record
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."
Originally posted by stevegmu
If the US Dollar is still at 62%, and the Yen and Euro make up the other 38%, how did the Dollar lose reserve status? Last I checked, 62% is bigger than 38%.
Originally posted by grey580
Somehow I have the sneaking suspicion that things are being set up for a so that the dollar comes out on top when the SHTF.
There's too many weird things going on for it to not be.
NEW YORK (Reuters) - Federal Reserve Chairman Ben Bernanke, in a rare comment on the U.S. dollar's value, on Monday acknowledged the currency's slump was raising some prices, but said other factors restraining inflation were winning the day.
While showing he was not indifferent to the dollar's slide, Bernanke said tight credit and a weak job market would weigh on the economy's recovery and he repeated the Fed's pledge to keep interest rates exceptionally low for "an extended period."
"We are attentive to implications of changes in the value of the dollar and will continue to formulate policy to guard against risks to our dual mandate to foster both maximum employment and price stability," he told the Economic Club of New York.
The Fed chairman said the central bank's commitment to its dual objectives, along with the strength of the U.S. economy, would help ensure that the dollar was strong and a source of global financial stability.