US dollar set to be major casualty of bad bank asset bailout

September 24, 2008 by · Leave a Comment
Filed under: Economic News 

What could you mean?  You mean when we issue our currency without limits that this will actually be dollar negative?  You darn right it is, smart money can read and they know what this means long term.  What we are proposing to do is prop up prices on assets that should be much lower and setting precedent that even if you get yourself stuck with billions or trillions of bad assets we the taxpayers are here to purchase them from you at a higher price and then give you cold hard cash so you can go about lending more credit and not solving the problem or trying to bring price levels to a place where it doesn’t effect the low and middle class citizens to an extent where they will be burdened the most and are really not going to get any upside from it other than maybe seeing our debt retired from the $700 billion we loaned which in comparison is a drop in the bucketed compared to a $10 trillion dollar plus public debt and $1 trillion dollar annual federal budget.  I still believe we should protect and reform our currency and let the free market run its course and purge the excess leverage.

News Piece:

Whether or not tomorrow’s accounts of today’s turmoil prove David Owen of Dresdner Kleinwort right; whether or not this is the beginning of the end of the dollar’s pre-eminence in the world’s central banks and foreign exchanges, the economic landscape has undoubtedly changed forever.

The US taxpayer bail-out of America’s banking sector is an event whose significance will reverberate for many years. What it means for free markets, for the way Western economies are run, for the prosperity of the world economy, must remain to be seen.

But as investors scrambled to make sense of last week’s events, already one conclusion was all but irrefutable – the US dollar will have to take another major fall.

The dollar rally that began in July and pushed the pound’s value against the greenback significantly lower has come to an abrupt end as markets face up to the fact that the currency will have to absorb the effects of a sudden shocking increase in America’s budget deficit.

When Treasury Secretary Hank Paulson announced that the world’s biggest economy was about to embark on the world’s biggest bail-out for its financial sector, the first concern economists had was about the long-term prospects for the nation’s finances and its currency.

Might the dollar now be vulnerable to a run? In the longer term, might this signal the beginning of the end for the dollar’s status as the world’s reserve currency?

Click Here to Continue Reading the Article and Public Comments

Speak Your Mind

Tell us what you're thinking...
and oh, if you want a pic to show with your comment, go get a gravatar!