Tuesday, June 22, 2010

It's all about the Euro, Yuan, USD....it's war!

Who can have the weakest currency?   Competitive devaluation, let the bullshit and rhetoric fly!

USD would love some inflation...easiest way to "pay down" the debt.   China repricing Yuan will make it harder for China to export to US, easier for US to export to China (not that huge anyway), and will raise costs in the US (because we can't buy the Chinese goods as cheap anymore).   That will make GDP numbers look good, and maybe even US firm profits will look better.  

Kind of a no-brainer to push for this, from the Gov standpoint anyway, from a conservative saver point of you, you are about to get screwed.

However, the powers of deflation are also very strong, credit drying up decreases the money supply.  So there is our second push me pull you tug of war going on.

These channels really look like they are working well on the Euro, they were drawn months ago.   They now have real legitimacy.

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Insightful and Useful Comment!