Wednesday, October 6, 2010


Everyday I am amazed at how prescient authors like George Orwell and Ray Bradbury were in picturing the odd reality we'd face here in 2010. 

Geithner warns in a Bloomberg report that currency devaluation is dangerous and damaging.  This is pretty funny given that the powers in charge have managed to crush the value of the dollar some 7% JUST IN SEPTEMBER! 

Obviously other countries are not going to sit idly by as we essentially put a tax on their currency and make their goods more expensive (meaning less purchases by us).  China, Brazil, Europe, and others cannot stand to have us continue our policies lest we damage their exporting economies.  Japan has tried like crazy to stop the trend as the Yen is at a 15 year high relative to the USD.  Imagine the heads that are rolling in the currency management department in China where they have lost almost 7% on their treasury holdings this month simply due to the currency moves!  A $100,000,000 loss in a month sort of hurts I would guess.

This is funny to watch as we are seeing a full measure of double speak, but this is the stuff that trade wars and essentially currency wars are made of.  Our actions to devalue have very real consequences for other countries and it is now a situation where it is every country for themselves.  Expect tariffs on manufacturing producers like Boeing and Caterpillar as this heats up.


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