HSBC bids farewell to dollar supremacy…
The sun is setting on the US dollar as the ultra-loose monetary policy of the US Federal Reserve forces China and the vibrant economies of the emerging world to forge a new global currency order, according to a new report by HSBC.
“The dollar looks awfully like sterling after the First World War,” said David Bloom, the bank’s currency chief.
“The whole picture of risk-reward for emerging market currencies has changed. It is not so much that they have risen to our standards, it is that we have fallen to theirs. It used to be that sovereign risk was mainly an emerging market issue but the events of the last year have shown that this is no longer the case. Look at the UK – debt is racing up to 100pc of GDP,” he said
Crucially, China and rising Asia have reached the point where they can no longer keep holding down their currencies to boost exports because this is causing mayhem to their own economies, stoking asset bubbles. Asia’s “mercantilist mindset” of recent decades is about to be broken by the spectre of an inflation spiral.
Read more at Telegraph
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Comments
This is big news to me. And one of the reasons I think that we are going to see gold and silver take off in the next year as a battle begins to wage in the financial markets for a replacement. I wouldn’t be surprised if the replacement is linked to gold.
Anybody who bought gold when it was cheap stands to make a buck or two. Anyone who is buying gold now? Prepare to buy high and sell low.
Falling dollar is the only hope to bring the american production machine back online. If a dollar is worth a half a million pesos, it’s cheaper to pay people in mexico. If a dollar is worth half a peso, it’s cheaper to pay people in the US.