Tuesday, October 30, 2012

The Start of the Crash of the US Dollar?

The exchange rate of the yuan hit a 19-year high as it traded at 6.2417 yuan per dollar.

The Chinese are clearly not supporting the dollar any longer.

According to a survey conducted by HSBC, 77 percent of Chinese companies expect one-third of all Chinese trade to be conducted in the yuan by 2015, and 30 percent plan to use the yuan in investment related activities in the next 12 months.

Thanks to decades of Federal Reserve money printing, the world is stuffed with dollars. Once, foreign operators choose to hold funds in non-dollar forms, the crash of the dollar begins.


  1. Wait until they start dumping TBills. That's when the real fireworks will start.

  2. Hello Bob, I was wondering if you thought this might be just what the FED wants at the moment. We have seen how policymakers have labeled China as "currency manipulators" and how Quantitative Easing has exported inflation to China, putting pressure on Chinese officials to revalue the yuan in relation to the U.S. dollar. With this Bernanke and the Fed as well as the Treasury assure that there's a cheaper and weaker U.S. dollar to boost exports and domestic growth in the short term. I think this is what Bernanke wants but he is blind and doesn't see that when all this money creation goes out of the member banks excess reserves and gets loaned out, then price inflation will start creeping up... What do you think?

    1. He's not blind, but (mistakenly, due to hubris) believes the Federal Reserve will be able to "control" the fallout. Pride goeth before the fall...