Free Republic

US Treasuries last week suffered their biggest two-day sell-off since the collapse of Lehman Brothers in September 2008. The borrowing costs of the government of the world’s largest economy have now risen by a quarter over the past four weeks. Such a sharp rise in US benchmark market interest rates matters a lot – and it matters way beyond America. The US government is now servicing $13.8 trillion (£8.7 trilion) in declared liabilities – making it, by a long way, the world’s largest debtor. Around $414bn of US taxpayers’ money went on sovereign interest payments last year – around 4.5...

Those nagging whispers warning that the United States is heading for an Argentina-like currency crisis are getting louder. The prospect of a prolonged devaluation of the US dollar is just one more challenge in what has already been a difficult period for savers and investors. Have we really reached the point where the greenback is in danger of becoming an “also ran” currency? (Snip) This correction has already started as millions of unemployed Americans can attest. The Federal Reserve has conceded that unemployment will remain elevated through 2011.

The dollar disaster is not exactly new news. In fact, it has been going down and down for a long time as this chart illustrates. The chart tracks the dollar versus major currencies back to the year 2000. The Federal Reserve had begun raising short-term interest rates in 1999 to beat back the roaring economy. In 2001, the economy fell into recession and then suffered the severe blow of the September 11 attacks. At that point, the Fed dropped interest rates to stimulate the economy. Reducing short-term interest rates also generally weakens the dollar. The blue line shows short-term fluctuations...

U.S. Treasury Secretary Timothy Geithner vowed on Monday that the United States would not devalue the dollar for export advantage, saying no country could weaken its currency to gain economic health. "It is not going to happen in this country." Geithner told Silicon Valley business leaders of devaluing the dollar. Geithner broke his silence on the dollar's protracted slide ahead of this weekend's meeting of finance leaders from the Group of 20 wealthy and emerging nations in South Korea, where rising tensions over Chinese and U.S. currency valuations are expected to take center stage. "It is very important for people...

In certain circles, it has become fashionable to argue that monetary policy is a superior instrument to fiscal policy – more predictable, faster, without the adverse long-term consequences brought on by greater indebtedness. Indeed, some advocates wax so enthusiastic that they support recent drives for austerity in many European countries, arguing that if there are untoward effects they can be undone by monetary policy. Whatever the merits of this position in general, it is nonsense in current economic circumstances. A quarter-century ago proponents of monetary policy argued, with equal fervour, in favour of monetarism: the most reliable intervention in the...

As measured by the price of the forward December contract on COMEX, the value of gold is up nearly 30% -- over $300 per troy ounce -- since last October, and it recently closed at a record high (in nominal terms) of $1,374 per ounce. Hardly unique among commodities, gold has had lots of company in the trading pits. Silver is up by 32%, and even the price of coffee is on the rise -- not only on the exchanges, but at Starbucks too. Gold's unflinching rise has caught many traditional equity investors off-guard, and some are even angry about...

Some OPEC members want oil prices to rise to $100 a barrel to offset the decline in the dollar. The value of the dollar, which has slipped 13% since June against major world currencies, means that the "real price" of oil is about $20 less than current levels, Venezuela's Energy and Oil Minister Rafael Ramirez said after Thursday's OPEC meeting in Vienna. OPEC, which accounts for 40% of global crude output, left targets unchanged and called for stronger adherence to production quotas, Bloomberg News said. "They're concerned about the dollar because as the dollar weakens, prices go up," Nordine Ait-Laoussine,...

While You Were Sleeping, The Dollar Continued To Get Crushed Joe Weisenthal Oct. 1, 2010, 5:36 AM Or to put it another way, the US gained ground in the global competitive currency devaluation war.[snip]

As gold hovers just below the $1,300 mark it broke last week, consensus expects the metal keep rising in the coming week. The bull is back: Bloomberg: Sixteen of 23 traders, investors and analysts surveyed by Bloomberg, or 70 percent, said the metal will rise next week. Six forecast lower prices and one was neutral. Gold for December delivery was up 1.3 percent for this week at $1,293.60 an ounce at 11 a.m. yesterday on the Comex in New York. Futures climbed to a record $1,298 on Sept. 22. ... The weekly gold survey that started six years ago has...

Adam Fisher: Big Chance Euro Zone Will Devalue or Dissolve Thursday, 13 May 2010 01:01 PM By: Forrest Jones There is a 65 percent chance euro zone countries will allow their currency to devalue or dissolve and everyone does their own thing, says Adam Fisher, Co-founder, CommonWealth Opportunity Capital, a Los Angeles Hedge Fund. Europe spent $140 billion aiding Greece, a figure that could have been a lot smaller had the rescue come months ago. Plus, other countries such as Spain and Portugal are going to come asking for help as well, Fisher says. “We're horribly bearish about the options...

Rarely are currency exchange rates as good for the American dollar as that of Asian countries. In Asia, the American dollar carries a lot of clout and with the recent devaluation of the USD; it is a good thing that these countries offer an excellent trip for so little cost to Americans.

(Reuters) - With economic policy stimuli already at full tilt, no government wants an overvalued exchange rate to slay recovery, and the rival "soft currency" needs are producing some elaborate rhetorical jousting. The problem is that major exchange rates -- at least those between the developed G4 economies of the United States, euro zone, Japan and Britain -- are largely market determined and difficult to control. There's no magic wand to conjure up devaluation and the monetary and fiscal levers that could possibly engineer a free-floating depreciation are near exhausted. G4 interest rates remain near zero. New money and liquidity...

NEW YORK/WASHINGTON (Reuters) - The only time the U.S. dollar ever took a serious shellacking in the marketplace, the wounds were almost entirely self-inflicted. Facing mounting inflation and the escalating cost of the Vietnam War, President Richard Nixon, on August 15, 1971, took the United States off the gold standard, which had been in place since 1944 and required that the Federal Reserve back all dollars in circulation with gold. The move amounted to a made-in-America double-digit devaluation, shocking the country's foreign creditors. Deep inside the New York Federal Reserve Bank's fortress in lower Manhattan, Scott Pardee, then 34, was...

The government said Tuesday that foreign demand for U.S. Treasury securities fell by the largest amount on record in December with China reducing its holdings by $34.2 billion. The reductions in holdings, if they continue, could force the government to make higher interest payments at a time that it is running record federal deficits. The Treasury Department reported that foreign holdings of U.S. Treasury securities fell by $53 billion in December, surpassing the previous record of a $44.5 billion drop in April 2009.

Vietnamese Hoarding U.S. Dollars As Dong Crashes Post-Emergency Devaluation Vincent Fernando Feb. 11, 2010, 12:01 AM Vietnam's currency, the dong, is crashing after the government was forced to devalue it by 3.4% against the U.S. dollar for the second time in under three months. The new fixed rate for the currency is 18,544 dong per dollar, versus 17,941 previously. The central bank also imposed a 1% ceiling on interest rates for dollar deposits at banks in a bid to disincentive the hoarding of dollars. Yet the black market thinks that the government will have to slash the dong's exchange rate...

Nervous Venezuelans panic buy TVs after devaluation Sat, Jan 9 2010 * Shoppers fear sharp price rises for imported goods * Opposition fuels shopping spree with warnings By Eyanir Chinea CARACAS, Jan 9 (Reuters) - Shouting "buy, buy, the world is going to die," Venezuelans went on a frantic shopping spree on Saturday following a sharp currency devaluation that is expected to drive up prices. President Hugo Chavez announced a dual system for the fixed rate bolivar on Friday night while much of the country was watching a baseball game. But on Saturday, word spread quickly as people read the...

CARACAS, Venezuela – Venezuelan President Hugo Chavez on Friday announced a currency devaluation for the first time since 2005. Chavez said Venezuela's currency, the bolivar, will now have two government-set rates depending on the use, either 2.60 to the dollar for transactions deemed priorities by the government or 4.30 to the dollar for other transactions. The devaluation dropped the currency's value by 17 percent or 50 percent, depending on the tier. The currency's official exchange rate has been held steady by the government at 2.15 bolivars to the dollar since 2005.

N. Korea's Currency Reform Could End in Chaos The North Korean military is on alert for a possible civil uprising following last week's sudden currency reform, according to a Russian business newspaper citing foreign diplomats in the communist country. The currency reform involved the exchange of only limited amounts of old bills at a rate of 100:1, with the state confiscating the remainder. People who are afraid of exposing the size of their wealth have no choice but to hide their old bills. It is difficult to ascertain the actual circumstances, but it is apparent the North Korean regime is...

The North Korean military has seized charge of the economy, elbowing out other ministries and the Workers' Party, the Washington Post said Tuesday. According to the daily, North Korea's military has "grabbed nearly complete command of the nation's state-run economy and staked out a lucrative new trade in mineral sales to China to make money for its supreme commander, Kim Jong-il." "The army has earned hundreds of millions of dollars selling missiles and weapons to Iran, Pakistan, Syria and other nations." But its two nuclear tests in October 2006 and in May 2009 "have triggered UN sanctions that are now...

OK, this is confusing: but this is the LINK to the original Japanese language article from the conservative/trustworthy South Korean "Chonsun Ilbo" daily newspaper website in Korean which reported from a Russian news agency just a little while ago.The headline is 北朝鮮デノミ：「住民騒乱を懸念、軍が戦闘準備」 ("North Korean Currency Devaluation: Worries Over Uprising By North Korean People; North Korean Army Goes on Sub-War Status")