If you’ve been paying attention to the US dollar, commodities, stocks and precious metals lately, you’ve likely noticed some big moves. Karl Denninger implies that Ben Bernanke and the policies of The Federal Reserve may have just kicked the currency war into high gear.
Bloomberg reports that China is now taking measures to protect itself from mass amounts of capital inflows in order to prevent asset bubbles resulting from too many dollars being printed and sent overseas.
It looks like the whole world, including Germany, Brazil, China and many other nations realize what’s going to happen if they don’t stop the flow of depreciating dollars into their economies – exported inflation and rising prices.
After the recession of the early 90’s, the Fed helped blow the tech bubble which subsequently crashed. To save us again, the Fed blew the housing bubble which crashed. Now, it looks like they have blown a global asset bubble in one of the toughest economic growth periods in the last several decades. This will not end well for stocks or bonds. Commodities and precious metals are a slightly different ball game, in our opinion, but they, too, may experience significant declines in the event of a market panic and sell off.
China and the rest of the world see what’s happening. We have the head of the World Bank talking about a gold standard, and Asian nations are discussing the creation of a mechanism of settlement other than the US dollar, effectively a regional reserve currency system.
According to reports, China and other Asian nations are prepared to act in unison to curb the US monetary expansion by acting to prevent the inflows – perhaps there has even been talk of unloading US debt based assets all at once if it comes to that.
Whatever happens, the end result is not going to be good for the America, or the rest of the world. We have previously warned that the newly instituted policies by China, and the outcry from the rest of the world may eventually result in a complete collapse of the US economy and the US dollar, a disconnect in asset prices, and in a worst-case scenario, the possible end of the world as we have come to know it.
From Karl Denninger of Market Ticker
This is going to get out of control very, very quickly unless you put your boot on his [Bernanke’s] neck and make this crap that is coming out of his mouth and fingers stop.
If you approved of this with the idea that it would allow you to continue to deficit spend, you need to understand that you’re not in control of the decision.Â Our trading partners are, and they’re saying “stop it right now or you’re done.”
Brazil – and others – will follow this lead.Â If China does whatÂ I think is next – the creation of a Pan-Asian exchange mechanism by which to clear trading obligations – the United States dollar hegemonyÂ is ****ed.
Bernanke has not been right about anything since 2005.Â That’s documented.
If you keep listening to him you’re running the risk of being the last President of this nation.
That’s not a joke -Â or an exaggeration.
Most Americans, distracted by reality TV sensations Snookie and The Situation, have absolutely no clue what is going on in the background. Our debt is staggering. Our government and central bank are completely out of control. Leaders and central bankers the world over are joining forces to counter the adverse effects of our policies on their economies.
Unless something changes, and changes right now, it’s just a matter of time before our largest creditors finally block Congress’ unfettered access to unsecured credit – at which point all of the really bad things many of our readers have imagined that might happen, WILL actually happen.
Remember, the last time we had a major financial crisis in the Fall of 2008, then Secretary Henry Paulson was quoted as saying that unless Congress acted to bailout the financial system, there would be tanks in the streets.
If Paulson was serious then, and considering nothing has been resolved since, then we’ve got a very big problem on our hands.