Beware the Fate of the US Dollar
Linda says:
America’s enemies are gloating in the falling value of the American currency.
Hugo Chavez has said that the fall of the dollar is not just the fall off the dollar, but the fall of the American empire.
Iranian President Mahmoud Ahmadinejad has implored his fellow OPEC members to sell their “black gold” in another currency. “We are selling our oil for the depreciating US dollar, a worthless piece of paper.”
That America and its currency is under attack from these parties is totally expected. (They are not exactly members of the George Bush fan club and America is leading a push to prevent Iran acquiring nuclear technology.)
But not making the same headlines is the fact that the Chinese and the Japanese are quietly selling their US Treasuries (US Government Bonds). Namely, well-informed parties who own enormous amounts of US dollar denominated investments are trying to sell down at least part of their holdings.
Ultimately, the US dollar (and every other paper currency) is a “worthless piece of paper” and its value is related entirely to the trust that people have in the government that issues it. For the entire lifetime of most of the people on this planet, the US dollar has been the world’s reserve currency. But that may be changing!
If sections of OPEC start to sell their oil in other currencies, (Chavez is most likely to do this, and Iran is already doing so), the demand world-wide for the US dollar will fall! Politics and economics are always intertwined and having your assets denominated in US dollars is likely to an unwise move.
If you live outside the US and don’t own American assets, you’re most likely to be affected by downward movements in the US stock market, as canny investors move to hold equities denominated in more stable currencies.
