Wednesday, September 29, 2010

Rolling Bear Markets in Various Currencies

The current dollar weakness is the third period of dollar weakness since 2007. Because the dollar remains the global reserve currency, a serious flight from the dollar would mean huge structural changes in the global economy and enormous price inflation in the U.S.

Given the dollar weakness during a period of rather tight money supply growth, it boggles the mind to contemplate what type of downward movement in the dollar will occur once Bernanke attempts to support a collapsing Treasury securities market.

Right now, the dollar is depreciating against most major currencies including the yen, the Swiss franc, the euro and the yuan. The Aussie dollar climbed to the highest since July 2008 vs the dollar to $0.9693.


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