Knowledge Creates Power: Dollar loses reserve status to yen & euro

Tuesday, October 13, 2009

Dollar loses reserve status to yen & euro

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.

GETTY IMAGES

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."

Comments:

Sorry guys, but you Americans just don’t get it. Your notion of the “fed” still is off? Greenspan, Rockefeller and all the other corrupt guys made you get to ands tay where you are...
If you think it was Obama, regardless of whatever else is wrong with him, then you are still narrow minded un-intellectual stereotypical Americans. Going blind thru decades of being used and now after only 10-months of Obama it should be all his fault.
On this newspaper I thought i would find more interesting comments but i see that the USA/fed republic is still blinded.

I feel sorry for you guys. The world is changing and the problem is not republican or democratic... its that the USA/ America who cannot believe that its not cool anymore to be American and all the other world is not using stars and stripes on t-shirts anymore. How awful the rest of the world is making their own game without the USA; step by step. It started with the euro and will end with a weak dollar.

Doesn’t the CIA report that the weak dollar is the biggest terror fear for the USA?

Its a matter of time till the last guy will see it on the dollar currency.

Cry load America. nobody cares out there. Its time to get rid of American terrorist governments including their war politics.

You need to change… And you need to look at the Fed, Bernanke, Greenspan, the Rockefellers, Gaithner… all of them. Wake-up of parish!

Comment on Whodunit? -

1. Any time that there is something very fishy going on in the financial world, you can bet that George Soros - son of satan - has his dirty rich hand in it. After all, he financed Obama's campaign and paid billions to ACORN, SEIU and other organizations to help get Obama elected. Soros also was most likely behind the 2008 financial crisis. He did the same thing in England a few years ago.
Remember that McCain was ahead in the polls before that happened? Rahm "dead fish" Emanuel even says, "can't let a good crisis go to waste."

2. If what you have surmised about the gold traders is true, sounds like they are more likely gold TRAITORS to America. Add them to the heavy list of traitors to our nation - including the current bogus POTUS, Congress, The Supreme Court, and the courts throughout the land who refuse to take the Obama ineligibility lawsuits to trial.

Apparently, money talks. If that doesn't work, them Obama thuggery takes over the task.

God help our nation - only He can rescue us from the Marxist tyranny being inflicted upon us by our current gangster government.

Source: The New York Post

Related Resources:

Whodunit? Sneak attack on U.S. Dollar – Updated

The G-7 Abandons the Dollar

Making the Connections Part II – History is Important for our Future… Knowing the Underlying Truth is Even More Important

The True Story of the Bilderberg Group

Congressmen Grayson and Paul Ask Senate Banking to Delay Confirmation of Bernanke Until Fed Releases Information – Perhaps Too Late!!

Will a Basket of Currencies Replace the Dollar or Will It be the IMF’s SDR?