[NTBKtrader]

One of the earliest lessons I learned at sea was about currency exchange rates. Even though currency valuation was not a subject taught at the Merchant Marine academy, my ship constantly traveled from one country to the next, so my education in what is today called FX -- or foreign exchange -- began.

Back then, the formal exchange rate in the banks was 360 Japanese yen to one U.S. dollar. On the black market in Hong Kong, I could get 366 yen to the dollar.

http://finance.yahoo.com/columnist/arti ... cher/10932

[scienceteacher]

[In overly simplistic terms, China and many countries in the world today lend us billions of dollars to buy their goods. They send us products like computers, televisions, cars, candies, and wines, and we send them funny money in return.]

No wonder this guy got away with publications extolling the real estate market - he was drinking chinese wine!

[americandream]

$this->bbcode_second_pass_quote('scienceteacher', '[')In overly simplistic terms, China and many countries in the world today lend us billions of dollars to buy their goods. They send us products like computers, televisions, cars, candies, and wines, and we send them funny money in return.]

No wonder this guy got away with publications extolling the real estate market - he was drinking chinese wine!

[basketballjones]

$this->bbcode_second_pass_quote('americandream', '
')
Perhaps you could enlighten us on the source of the widening deficit.

[Dreamtwister]

$this->bbcode_second_pass_quote('basketballjones', '')$this->bbcode_second_pass_quote('americandream', '
')
Perhaps you could enlighten us on the source of the widening deficit.

[Tyler_JC]

$this->bbcode_second_pass_quote('Dreamtwister', '')$this->bbcode_second_pass_quote('basketballjones', '')$this->bbcode_second_pass_quote('americandream', '
')
Perhaps you could enlighten us on the source of the widening deficit.

[mattduke]

$this->bbcode_second_pass_quote('NTBKtrader', 'O')n the black market in Hong Kong, I could get 366 yen to the dollar.

[Dreamtwister]

$this->bbcode_second_pass_quote('Tyler_JC', '')$this->bbcode_second_pass_quote('Dreamtwister', '')$this->bbcode_second_pass_quote('basketballjones', '')$this->bbcode_second_pass_quote('americandream', '
')
Perhaps you could enlighten us on the source of the widening deficit.

[DantesPeak]

Luckily, China won't use its $1 trillion in reserves to directly buy oil as an investment to deploy spare dollars (but they do plan on buying 1 billion barrels for a SPR).

Depsite the fact that it appears that China has saved the day, the central banks of the world not only are not stopping inflation - but are actually in the process of accelerating inflation.

China buys its US$ reserves mostly (but not entirely) by issuing new fiat money (it does also borrow from the savings of the Chinese people). The US also issues fiat money (essentially Federal Reserve notes are fiat money backed up with a small amount of gold). As China, Japan, etc., issue fiat money to buy US fiat money, more and more fiat money is created. For the most part, Japan has refrained from issuing new fiat the last year or two after splrging in 2002 and 2003 to stop the dollar from losing value.

This money game will only stop when someone like China says 'game over'. So far they still want to play this game.

Meanwhile the dollar will continue to lose value until finally all the central banks just give up - and then the 'fun' begins.

$this->bbcode_second_pass_quote('', 'C')hina won't use forex reserves to buy oil


www.chinaview.cn 2006-10-17 17:37:56

BEIJING, Oct. 17 -- China won't use its foreign exchange reserves to buy energy products, including oil, the official Securities Times reported a senior official at the central bank as saying.

People's Bank of China Vice Governor Wu Xiaoling said the central bank isn't allowed to directly use foreign exchange reserves to buy energy assets, said the report Monday.

Any parties that want to use China's foreign exchange reserves should use their yuan to buy foreign exchange funds from the central bank, Wu was cited as saying.

China's foreign exchange reserves totaled 769 billion U.S. dollars at the end of September, up 50 percent from the same month a year earlier.

The strong growth of the reserves, largely boosted by the country's surging trade surplus, has created excess liquidity and added upward pressure on the yuan.

[RdSnt]

http://mwhodges.home.att.net/nat-debt/debt-nat.htm

[MrBill]

$this->bbcode_second_pass_quote('americandream', '')$this->bbcode_second_pass_quote('scienceteacher', '[')In overly simplistic terms, China and many countries in the world today lend us billions of dollars to buy their goods. They send us products like computers, televisions, cars, candies, and wines, and we send them funny money in return.]

No wonder this guy got away with publications extolling the real estate market - he was drinking chinese wine!

[MrBill]

$this->bbcode_second_pass_quote('RdSnt', 'h')ttp://mwhodges.home.att.net/nat-debt/debt-nat.htm

[evilgenius]

Right now I think the danger for the dollar lies in the trend around the rest of the world to raise interest rates. If the Bank of England and the European Central Bank along with the Chinese raise rates by more than a quarter point in the near term the Federal Reserve will be forced to raise US rates in order to offer a competing investment. Ordinarily this wouldn't hurt the US economy, but as it happens housing is hanging by a thread. Another rate adjustment upward and the US could look like Britain under Nigel Lawson.

Demand destruction is coming.

[Scactha]

$this->bbcode_second_pass_quote('MrBill', 'T')he dollar is a freely traded currency. Anyone, any country, can buy or sell dollars against another freely convertable currency and invest their savings elsewhere.

[MrBill]

$this->bbcode_second_pass_quote('Scactha', '')$this->bbcode_second_pass_quote('MrBill', 'T')he dollar is a freely traded currency. Anyone, any country, can buy or sell dollars against another freely convertable currency and invest their savings elsewhere.

[Scactha]

I was just suprised the previous answer was so brief Mr Bill. Thanks for the elaboration.

Despite all the america bashing the rest of the world is as much of a herd mentality. The human power of self delusion is endless and as such I belive the party will go on until the booze is dried up. (Interesting analogy isn´t it?)

I would not agree that the Cold War round two has started though. I´d say that WWIII with unconventional arms is in progress. With energy and economy there´s a battle of Eurasia accelerating and PO is at the heart of it.

[gego]

If the US dollar is in trouble, then the British Pound, Austrailian Dollar, South African Rand and Canadian Dollar in even bigger trouble over the next two years. I think that only the Swiss Franc and the Japanese Yen will do better than the dollar during this time frame.

Of course all measured against gold and silver should do poorly.

Just my take on it.

[MrBill]

$this->bbcode_second_pass_quote('gego', 'I')f the US dollar is in trouble, then the British Pound, Austrailian Dollar, South African Rand and Canadian Dollar in even bigger trouble over the next two years. I think that only the Swiss Franc and the Japanese Yen will do better than the dollar during this time frame.

Of course all measured against gold and silver should do poorly.

Just my take on it.

[MD]

The Chinese are fully aware that the global paper game is temporary. They are using the system to build a massive manufacturing base and to gain control over critical world resources.

Some day, in the near future, the Chinese will decide the game no longer has value, at which time they will exit the game.

The new game will be one of their own design, and the western world will not like the rules.

The western world will be forced to play, or go without clothing.

The Last Days of the Dollar indeed.

[evilgenius]

I think the Pound and especially the Euro will do well if the dollar weakens. The question is why the dollar weakens? If the catalyst is something that causes international panic then there is a tendency to flock to the dollar. Should the incident undermine that mechanism the dollar will fall but all of the European currencies would probably gain. If the issue has also to do with PO then the yen will probably tank.

What about the other alternatives?

As far as holding physical gold goes I think that is an invitation to be eaten up by fees. You can buy as many shares of a gold stock as you want for a simple one time fee. Coins, on the other hand, each have an exchange fee attached to them. You can get around that with bullion but how can you buy anything with bullion in case you are stuck with it as a means of transaction? Bullion is for the big boys. Bills are for the rest of us. Worst case scenario the people in the US will still trade bills for at least one generation, we are well trained. The next gen probably not so much, that is where the true physical gold market lies. I could probably get enough from somewhere, dead people, in the meantime for a lot less overall effort than the cost of paying hefty coin shop transaction fees.