http://albertpeia.com/fedprintingbankruptsthelendermeanswar.htm
‘The tension between Central
Banks that we noted yesterday continues to worsen. This time it was China and
the EU, not just Germany, that fired warning shots at the US Fed.
A senior Chinese official
said on Friday that the United States should cut back on printing money to
stimulate its economy if the world is to have confidence in the dollar.
Asked whether he was worried
about the dollar, the chairman of China’s sovereign wealth fund, the China
Investment Corporation, Jin Liqun, told the World Economic Forum in Davos: “I
am a little bit worried.”
“There will be no winners
in currency wars. But it is important for a central bank that the money goes to
the right place,” Li said.
Speaking at the same session, French
Finance Minister Pierre Moscovici voiced concern that the euro was becoming
overvalued as a result of quantitative easing and other stimulus actions taken
by other nations’ central banks.
“Certainly, the level of the
euro is high and creates some problem,” he said, attributing the single
currency’s recent gains partly to the return of confidence created by the
European Central Bank and euro zone governments in starting to overcome
Europe’s debt crisis.
http://www.reuters.com/article/2013/01/25/us-davos-currencies-idUSBRE90O10620130125
So first Germany begins pulling
its Gold reserves from the US, and now China and the EU are saying publicly
that the Fed’s policies are damaging confidence in the US Dollar.
This does not bode well for the
financial system. The primary role of Central Banks is to maintain confidence
in the system. If the Central Banks begin to turn on one another it is only a
matter of time before the system breaks down.
Remember, every time the Fed
debases the US Dollar it forces the Euro and other currencies higher, hurting
those countries’ exports. The Fed has recently announced it will be printing
$85 billion every month until employment reaches 6.5% (obviously the Fed is
ignoring the mountains of data that indicate QE doesn’t create jobs).
How long will the other Central
Banks tolerate this before they initiate a currency war? Both Germany and China
have fired warning shots at the Fed. And we all know that just beneath the
veneer of goodwill, tensions are building between the primary players of the
global financial system. More importantly, how can investors profit from this?
Remember, entire fortunes can be made during times of crises.
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