Are Iran, Russia, China behind dollar's free-fall? Some see 'Currency Cold War' against U.S.

World Net Daily ^ | 10-01-07

[yankeesdoodle]

What would it mean if China ever threw its economic weight around by dumping dollars in a major way?

Suffice it to say it is referred to in some quarters as China's financial "nuclear option," because it would be the economic equivalent of detonating a thermonuclear weapon in the world's financial markets.

But the American dollar's fate is hardly in the hands of the Chinese alone. Other foreign parties suspected of participating in a new "Currency Cold War" are Iran, Russia and Venezuela.

[coloradan]

The US dollar’s biggest enemy is the US gevernment. If you print them like they’re going out of style - they will soon be going out of style.

[in hoc signo vinces]

In the most simplest of overviews....

If you’re country is a third world country with no manufacturing base, agri-base, service sector, etc...then you worry about currency devaluation. When your country is not...then you dont...

And it seems, despite the currency issue, US treasuries are hardly being firesold by their foreign owners and/or not purchased.

[Red Badger]

There are literally trillions (1000 billion = 1 trillion) of dollars “out there” in the world economy, circulating from country to country, in payment for goods and services. The holders of those dollars, China, Russia, Iran as well as Europeans, Japan and others would be shooting themselves in the foot by dumping their reserves on the market in a massive “currency bomb”..............

[Brilliant]

It’s all about oil. When you import as much oil as we do, you’ve gotta expect to have a trade imbalance, and that depresses the value of the dollar overseas.

But the irony is that they are in as much of a fix as we are. If they stop selling to us, they lose their best customer.

[RC2]

This is one reason there are those out there that say this is exactly what some in Washington want. When it gets real bad, they will be recommending the NAU and the conversion to the Amero. I believe it’s an underlying plan that we are not being told about.

[Nervous Tick]

>> The holders of those dollars, China, Russia, Iran as well as Europeans, Japan and others would be shooting themselves in the foot

Yeah, kinda like strapping your “currency bomb” to your chest... then detonating it inside your mosque during Friday prayers.

[llevrok]

Keep an eye on Soros. He darn near brought the Pound Sterling down some years ago....

[Resolute Conservative]

Bernake should have raised when he lowered. There is no correction for those companies that loaned money to every Tom, Dick, and Harry out there and they were spared having to pay the pipe by being allowed to continue the Ponzi scheme they have going.

[who_would_fardels_bear]

"and the conversion to the Amero"

However bad the dollar gets it will still be much better than all of the currency south of the border down to Tierra Del Fuego.

Combining diving dollars with pesos de monopolia from Mexico and SA into an Amero is a silly idea that will get no traction whatsoever.

[ari-freedom]

yes but there is less risk for the dollar when it is held by governments as they don’t make the most efficient decisions. They will keep the $ even when it doesn’t make economic sense. Give the $ over to the private sector and the value of the dollar will fall even more.

[who_would_fardels_bear]

"There is no correction for those companies that loaned money"

How many mortgage companies went belly up in the past year?

There is some comeuppance.

Lowering the rate means that there will be a little less comeuppance, but there will nevertheless be plenty of comeuppance to go around.

Yes the richest of the rich at the top of the Ponzi pyramid will escape unscathed. But that is the way of the world, and we will not be able to correct that short of instituting a dictatorship and borrowing a few guillotines from the French.

[Red Badger]

What government has EVER “given” money over to the private sector?..........;^)

[RightWhale]

The $US has not been plunging to new depths the past couple days. Actually, it seems to have rebounded a little.

[Red Badger]

However bad the dollar gets it will still be much better than all of the currency south of the border down to Tierra Del Fuego.

There are a couple, if not more, South American countries that have adopted the American Dollar as their currency. Bolivia? Ecuador? I can't remember which ones, probably more.......

[wayoverontheright]

If you’re country is a third world country with no manufacturing base, agri-base, service sector, etc...then you worry about currency devaluation. When your country is not...then you dont...

Exactly! Our products in any country where our currency is weak are thus made more competitive. If China were manipulating our currency to devalue it, then they are making our products there cheaper, not to mention in Europe and the rest of the world.

I have had occasion to travel a lot abroad lately, and I can tell you that American-manufactured products are being sold in much greater numbers now than five years ago. Ford and GM sales are booming in Argentina, Mexico, Austria, and China, the first three of which I have seen with my own eyes. I just got back from Mexico after being there also five years ago, and the Chevrolet nameplate is absolutely dominant in the small car segments now; that is, competing against Toyota, Nissan and VW.

This trend is so positive because for the most part these vehicles are made in the countries I mentioned. Products made in America will benefit even more from currency differences.

[PugetSoundSoldier]

Here's a 3 year plot of the Hong Kong Dollar (close enough to the Chinese Yuan) versus the US Dollar. Don't see any real movement there - nice tight window, high to low of just $0.08 over the last 3 years.

It's not the Chinese; the USD is being purposefully devalued to break the EU. Note that the Chinese - and to a lesser extent, the Taiwan Dollar, South Korean Won, and Japanese Yen - are all "pegged" or at least kept close to the same value with the greenback.

With the drop in the dollar, all these other currencies have also taken a "hit". Of course, it doesn't affect trade BETWEEN these countries at all. Since we all agree on the same basic value of the currency.

But the EU's been left out to dry. Suddenly what few exports they had are now 40% more expensive over the last 5 years. And ours (and those pegged to us) are 35-40% cheaper. That's a BIG swing.

No, I think this is being done to break the Euro, and thus the EU. With France and the Netherlands refusing to approve the EU Constitution, and more and more of the major countries being conservative (Germany, France, Netherlands, Poland), I think this is all about eliminating the economic and political power that the EU could eventually be.

China's implicitly going along with us, because in the long term we're going to be a better partner for them than the EU. Likewise Japan, South Korea, and Taiwan. They've tied their futures to the US, and as a result the EU's been left out to dry...

[who_would_fardels_bear]

"I think this is being done to break the Euro"

I thought we lived under a relatively free market?

I thought that all attempts to manipulate the currency one way or another would be overwhelmed by natural market forces?

What I see is the dollar being devalued because of our huge budget and trade deficits.

The devaluation of the dollar is not just a result of this, but also a corrective: consumers will consume less and our exporters will sell more.

The deficits will come down, and the dollar value will stabilize.

Anything else anyone is trying to do will be counteracted by everyone else, but the amount of resources they have to push the currency market in one direction or another is miniscule compared to the total amount of resources engaged in basic commerce.

Even George Soros doesn't have enough money to tilt things in his direction for too long.

Look what happened to the Hunts.

[ari-freedom]

if they sell dollars to buy euros, where do the dollars go?

[ari-freedom]

What I see is the dollar being devalued because of our huge budget and trade deficits.
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where did you get this from? lester thurow?