posted on Jan, 16 2013 @ 08:53 AM
Even the mainstream media are starting to talk about the Currency War that America has unleashed on its friends. The folks at CNN are getting
Ben Bernanke's low interest rate policy has driven down the dollar. America's trading partners aren't happy.
The first Fed side effect, currency wars, is an example of how something good -- stimulating our economy by lowering interest rates -- can have a
downside. Cutting interest rates faster and more deeply than most other central banks has weakened the dollar against the currencies of many of our
major trading partners. The Fed doesn't exactly run around telling the public that it's happy to see this happen. But that's the case, because a
gradually declining dollar encourages job growth in our country by making our exports cheaper and our imports more expensive.
The problem, which reared its head in the run-up to the Great Depression 80 years ago, is that if everyone devalues, no one benefits. Instead, you get
widespread instability, fear, and trade wars. The prospect of that makes even a congenital optimist like me more than a little nervous.
Coming from Australia I am upset that Bernanke is attacking Australias exporters. Australia and America were supposed to be friends. Japan is furious.
Why would America want to attack Japan? I thought they were trying to use Japan to annoy China. Starting a Currency War and causing the Japanese Prime
Minister to lash out doesnt seem like a smart move by America. Australias Foriegn Minister Bob Carr voiced concern after Americas dramatic 'fiscal
cliff' agreement that America is not doing enough to cut spending and address National Debt. South American nations are outraged by the currency War
and were the first to call America out. Why is America attacking the few friends it has left? I know when you are drowning in the ocean you panic and
often drown people around you but geez. Attacking friends is not a way for America to solve its economic problems.
The Fed is playing a complicated, high-stakes game here. The dollar is the world's reserve currency, which allows us to suck in money from all
over the world to fund our trade and budget deficits without having to balance our accounts. There's a tension between our internal situation (a lower
dollar is good) and our role as a reserve currency (a dollar that falls too rapidly risks spooking investors and costing us our reserve-currency
Its actually not that complicated. Maybe for your average CNN employee or reader. Without the Reserve Status America will experience what is known as
hyperinflation. This is bad.
Central Banks are looking to replace USD Reserves with gold and demand for the RMB id high. America got a warning about another Credit Downgrade
today. The bad news for America keeps on rolling in. America really has nobody to blame but themselves. They have backed Central Banks into a
edit on 16-1-2013 by HenryNorris because: (no reason