Friday, October 31, 2014

The US Dollar: As Always There Is No Free Lunch!

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In other words failed foreign policy and an endless stream of easy money provided by Fed academicians with no real-world experience can, do and will have ramifications!

Of growing concern for the United States is that the continuation of the global preeminence of the US dollar, failed US foreign policy and Federal Reserve QE-ad infinitum are inextricably intertwined.

The two articles below look at the historical impact of hyperinflation on a currency along with the danger that the US dollar will lose its current place as the global currency of choice!

They will examine:
  • The developing and cozy non-US petrodollar based relationship between Russia and China and, 
  • An historical look, with potential current day relevance, at the devastation in Germany as its currency began the process of dying after 1910.
Both are well worth a read!

'When Money Dies: Germany and Paper Money After 1910' from the Mises Institute

The story of the destruction of the German mark during the hyper-inflation of Weimar Germany from 1919 to its horrific peak in November 1923 is usually dismissed as a bizarre anomaly in the economic history of the twentieth century. But no episode better illustrates the dire consequences of unsound money or makes a more devastating, real-life case against fiat-currency: where there is no restraint, monetary death will follow.

"It matters little that the causes of the Weimar inflation are in many ways unrepeatable; that political conditions are different, or that it is almost inconceivable that financial chaos would ever again be allowed to develop so far," wrote British historian and MP Adam Fergusson in his 1975 classic, When Money Dies. "The question to be asked — the danger to be recognized — is how inflation, however caused, affects a nation."

The US Federal Reserve of 2014 is not the Reichsbank of 1914. Yet today's policy mindset is...Continue reading here.

'The End Of An Era: Is The US Petrodollar Under Threat?' from

Recent trade deals and high-level cooperation between Russia and China have set off alarm bells in the West as policymakers and oil and gas executives watch the balance of power in global energy markets shift to the East.

The reasons for the cozier relationship between the two giant powers are, of course, rooted in the Ukraine crisis and subsequent Western sanctions against Russia, combined with China's need to secure long-term energy supplies. However, a consequence of closer economic ties between Russia and China could also mean the beginning of the end of dominance for the U.S. dollar, and that could have a profound impact on energy markets...Continue reading here.

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