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USD in Central Bank

1/31/2007 4:06:22 PM

branden

5 posts

USD in Central Bank

The current US dollar based international financial system is about to go through a dramatic change because of the new competition from the euro. I don't know, when or what will trigger the coming events, since no finance minister or central banker wants to be blamed for launching the world into a major international monetary crisis.

The USD will continue its trend of fall even in 2007 and only the losers would hold their reserves in US dollars at this juncture.

So the smart people should avoid investing in Dollars.

1/31/2007 4:40:46 PM

jarrett

7 posts

Re: USD in Central Bank

As you have mentioned previously... a forecast of 1.40 vs. the EURO...I am now seeing this same forecast in other publications more frequently than before...
The real question here is ...what does the world economy look like if the dollar moves drastically lower than 1.40.... and with regards to the developing countries...what will they look like?
The question is most like a world equation with the US being counted as a constant in that whatever happens to the US...is reflected likewise to the rest of the equation...
What would cause the US to no longer be reflected as the same constant...and as far as the poorer developing countries...will they just not shift over to more US produced goods...especially cars and big equipment items? Could the dollar drop possibly be a good thing for some of them in that their currencies might actually buy more dollars as well?
And if the dollar does drop in an extreme manner...would this not be a buying opportunity?
At any given time...when one looks at the different currencies of the world.... opportunity knocks when there are existing problems that are going to be worked out...and what you might also add is the idea of Sores Reflexivity.... which could further smooth what would otherwise be a sharp move...

1/31/2007 5:06:05 PM

conor

6 posts

Re: USD in Central Bank

Of course the main tool for currency adjustments are interest rates...
The rates for Turkey...Iceland...Venezuela...Brazil...are all above 12%.
The current US rate is 5.25%...
What would be your opinion on future US interest rates?
Do you think that Bernanke and Paulson will protect the US domestic economy by lowering rates...or do you think that the fed will be stuck having to pay higher rates just to get money...?

2/1/2007 11:58:05 AM

BrianTran

155 posts

Re: USD in Central Bank

I don't think the Fed will be concerned about the US $ devaluing. He's more concerned about inflation and domestic economy. This is just my observation but I think if the Fed does focus on that the currency would take care of itself. Bernanke or Greenspan never believed in tying down the $, it's against free markets (I know everyone else believes that but doesn't really apply and protect their domestic interest). Their policy yesterday was right on, holding it steady on concerns about economy and not on currency devaluation concerns.

The sum is greater than its parts.

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