US Backing For World Currency Stuns Markets
March 18, 2011 by admin
Filed under News Stories
March 18th, 2011
The Telegraph
By: Ambrose Evans-Pritchard
The dollar plunged instantly against the euro, yen, and sterling as the comments flashed across trading screens. David Bloom, currency chief at HSBC, said the apparent policy shift amounts to an earthquake in geo-finance.
“The mere fact that the US Treasury Secretary is even entertaining thoughts that the dollar may cease being the anchor of the global monetary system has caused consternation,” he said.
Mr Geithner later qualified his remarks, insisting that the dollar would remain the “world’s dominant reserve currency … for a long period of time” but the seeds of doubt have been sown.
The markets appear baffled by the confused statements emanating from Washington. President Barack Obama told a new conference hours earlier that there was no threat to the reserve status of the dollar.
“I don’t believe that there is a need for a global currency. The reason the dollar is strong right now is because investors consider the United States the strongest economy in the world with the most stable political system in the world,” he said.
The Chinese proposal, outlined this week by central bank governor Zhou Xiaochuan, calls for a “super-sovereign reserve currency” under IMF management, turning the Fund into a sort of world central bank.
The idea is that the IMF should activate its dormant powers to issue Special Drawing Rights. These SDRs would expand their role over time, becoming a “widely-accepted means of payments”.
Mr Bloom said that any switch towards use of SDRs has direct implications for the currency markets. At the moment, 65pc of the world’s $6.8 trillion stash of foreign reserves is held in dollars. But the dollar makes up just 42pc of the basket weighting of SDRs. So any SDR purchase under current rules must favour the euro, yen and sterling.
Beijing has the backing of Russia and a clutch of emerging powers in Asia and Latin America. Economists have toyed with such schemes before but the issue has vaulted to the top of the political agenda as creditor states around the world takes fright at the extreme measures now being adopted by the Federal Reserve, especially the decision to buy US government debt directly with printed money.
Mr Bloom said the US is discovering that the sensitivities of creditors cannot be ignored. “China holds almost 30pc of the world’s entire reserves. What they say matters,” he said.
Mr Geithner’s friendly comments about the SDR plan seem intended to soothe Chinese feelings after a spat in January over alleged currency manipulation by Beijing, but he will now have to explain his own categorical assurance to Congress on Tuesday that he would not countenance any moves towards a world currency.
It is very doubtful you will run for office I guess, because people don’t want to send in their hard earned money to someone that isn’t even sure. But you know that. So will you send the money you do recieve back to who gave it? A few extra bucks on the side? Life is not all about money Kev. It is not how many friends you appear to have, but how good afriend you are to others. Yes, including even strangers. You can escape from and decieve man, but you are naked and totally exposed in the eyes of God.
John you should listen a little closer o the show. WE are not donating to his campaign, we are donating to KT’s legal defense fund. The donations go to his legal expenses for defending OUR right to freedom of speech. If he gets prosecuted for the bullshit they are accusing him of it’s just one step closer to destroying the constitution for the rest of us.
I also have to say the day my “Hard earned money” of a measly $5-$10 donation is to much money to put out to someone who has helped me in anyway is the day you should rethink your finances lol.
Even more importantly than the money, it is the energy that is put out by the donater through themselves when they donate. That collective energy means a lot more than the money, I mean seriously… $5, I can find that in the couch…
I support kevin obviously and hope you listen to the show more often. Your opinions will change once you find out who he really is.
Thanks for you insites Kevin, Best Regards Stephen GIN #1520850
I was enjoying listening to Kevin as a diversion from Alex Jones. Alex was telling everyone to leave So. Cal.(tsunami), while Kevin said just relax.It seems Alex enjoys envisioning the worst possible. But when Kevin starts talking about studying how to win friends and influence people I get a bad taste in my mouth. I just like a pure heart, not techniques to influence people so you can get ahead. It is a bit disgusting to me. Nausiating. To me that spells con-artist, selfishness, and lying greed. And then I heard he went to prison for fraud. Com on Kev. Greed aint the way! That is the losers path!!!
Robert, I can Virtually guarantee that you have never read “how to win friends and influence people”. It has nothing to do with greed, it is about bettering yourself so that people will Want to associate with you. Do a little research before you open your mouth and show everyone what a loser (using your word) you are. And I highly recommend reading that book, especially you, hint, hint.
Wow, this guy says the dollar will remain for a long time, but not forever. The seeds of doubt have shown, What is that slop? This guy is dragging our dollar down faster than anything with his negative attitude, for pete sakes he is becoming richer robbing the American Public, yet he feels the need to say dumb things in public view, wow, this guy!!!!!!!
….and Canada will probably follow along like we always do.