Dollar loses reserve status to yen & euro

[Hazcat]

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.
Fed boss Ben Bernanke may be forced to raise rates in order to restore faith in the dollar — and help bring the euro and the yen back to earth.

Currently, dollars account for about 62 percent of the currency reserve at central banks -- the lowest on record, said the International Monetary Fund.

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."

Investors and central banks are snubbing dollars because the greenback is kept too weak by zero interest rates and a flood of greenbacks in the global economy.

They grumble that they've loaned the US record amounts to cover its mounting debt, but are getting paid back by a currency that's worth 10 percent less in the past three months alone. In a decade, it's down nearly one-third.

Yesterday, the dollar had a mixed performance, falling slightly against the British pound to $1.5801 from $1.5846 Friday, but rising against the euro to $1.4779 from $1.4709 and against the yen to 89.85 yen from 89.78.

Economists believe the market rebellion against the dollar will spread until Bernanke starts raising interest rates from around zero to the high single digits, and pulls back the flood of currency spewed from US printing presses.

"That's a cure, but it's also going to stifle any US economic growth," said Schiff. "The economy is addicted to the cheap interest and liquidity."

Economists warn that a jump in rates will clobber stocks and cripple the already stalled housing market.

"Bernanke's other choice is to keep rates at zero, print even more money and sell more debt, but we'll see triple-digit inflation that could collapse the economy as we know it.

"The stimulus is what's toxic -- we're poisoning ourselves and the global economy with it."

http://www.nypost.com/p/news/business/dollar_loses_reserve_status_to_yen_hFyfwvpBW1YYLykSJwTTEL;jsessionid=65E301CF47ED50D15170F8D6530791C5

Beginning of the end?

[jimmything]

Better buy gold folks.

[mudman]

LEAD to

[WatchManUSA]

The falling in value of the dollar probably is one of the major reasons oil prices have jumped this past week.

[tombogan03884]

It will be the beginning of the inflation that MUST naturally follow BO's marathon cash printing spree.

[Sponsor]

[ericire12]

This is a sign that the rest of the world sees the reality of what Obama is doing to our nation, and they are doing this to trying and isolate the problem to our shores so that it will effect them as little as possible.

"Vast right wing conspiracy" indeed

[callithump]

We're going through a period of de-flation first. When it is over we will see inflation then probably hyper-inflation.
My 94 year old Aunt discouraged me from buying gold saying it will be hard to use for money when the time comes.... she went through that in the depression.
I'm trying to outright own everything including my house. We probably have a year or so left before the mess Barry Barrak Soetoro Hussein Odingo Obama created blows up.

[ericire12]

Gold is a speculative commodity just like copper, oil, corn, pork bellies, etc, etc.....

You are still  betting that it will go higher...... Right now we are seeing gold at all time record highs, so lets not forget the old adage -- Buy low sell high.

If you have great wealth, it would never be wise to have it primarily in currency.... any currency.... even in good times...... for any extended period of time. But most of us dont have that kind of wealth. Many people run to gold when they think there is going to be inflation in their particular currency, but that isnt necessarily the right move. It produces initial price increases and a market bubble just like with anything else.

The price of gold may still go down. It is not as inversely proportionate to the markets as you might think.... and because of that it will not give you the proper diversification you need to accomplish what you think you might be accomplishing. Gold is a part of being properly diversified, but it should be a very small part, and it should be bought with the mind set of not cashing it in for several decades.

And yes, like grandma told ya.... If the SHTF you are gonna need beans, bullets, and gasoline.   

[Ping]

I keep hearing conspiracy rumours of a mass economic collapse coming in the end of October/November. And they come from people that I truly respect. Not sure what to think cause I hate this crap but I do agree with investing/buying gold and ammo. Not liking the decisions made by the current administration and keep watching society decline.

Guess we should just hold on to our guns and hold out for a long winter. Protect your resources and stock up on goods. I really feel like things are going to get rough for a while. I just keep praying for a turnaround in the economy.

Got home from my Lodge tonight and my wife told me that her father has a friend in advertising for Honda (asshole) and has 22 years in advertising. They told him he was laid off via text message on his cell phone. Hate that he is laid off but hate the thought of Honda starting to get hit since all these idiots are buying foreign vehicles. Just my opinion.   Things are getting tough all over.

PS: I agree with what Eric's grandmother said about beans, bullets and gasoline. Let me ask you this Eric, did she experience the Great Depression? If so, I would go with that advice as if it were spoken from God.

[tombogan03884]

Gold is a speculative commodity just like copper, oil, corn, pork bellies, etc, etc.....

You are still  betting that it will go higher...... Right now we are seeing gold at all time record highs, so lets not forget the old adage -- Buy low sell high.

If you have great wealth, it would never be wise to have it primarily in currency.... any currency.... even in good times...... for any extended period of time. But most of us dont have that kind of wealth. Many people run to gold when they think there is going to be inflation in their particular currency, but that isnt necessarily the right move. It produces initial price increases and a market bubble just like with anything else.

The price of gold may still go down. It is not as inversely proportionate to the markets as you might think.... and because of that it will not give you the proper diversification you need to accomplish what you think you might be accomplishing. Gold is a part of being properly diversified, but it should be a very small part, and it should be bought with the mind set of not cashing it in for several decades.

And yes, like grandma told ya.... If the SHTF you are gonna need beans, bullets, and gasoline.   

In the short term you are correct. But in the long run, when things have restablized, the basic unit of currency will return to it's base in silver and gold.