Beast Toast - View Single Post - Fed Bank Of New York Admission To Devaluing The Dollar By Design

RATSOADM · 02-29-2008, 12:21 AM

for fans of the federal reserve

Quote:

This article appeared in print 2006. It's not a conspiracy, just facts! Though there are many other sources depicting our economic demise such as the Club of Rome, etc. This article illustrates the arrogance of these traitors. This article is in pdf format, so you will have to scroll down to the 7th page from top.

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By: Michael
Woolfolk, Senior
Currency Strategist
Dollar implications of the US financial “dream team”

US Treasury Secretary Hank Paulson was sworn into office recently with strong bipartisan support. Hopes run high that he can revitalize
efforts on entitlement reform, deficit reduction and Chinese currency flexibility. Paulson and newly installed Fed chairman Ben Bernanke are arguably the best-qualified US financial duo of the post-war era. Together they represent a financial “dream team” for President Bush with pro-growth bias evident on both accounts. However, successful financial and monetary policy making could paradoxically support US growth while at the same time undermining the dollar.

The US Treasury’s so-called “strong dollar policy” faces its greatest test this year as Secretary Paulson defines his views on the role of the US dollar in correcting the global imbalances problem. His views regarding entitlement reform and deficit reduction are consistent with longer-term bipartisan goals, though short on affirmative steps to be taken. However, his views on currency policy remain largely obscure. While Paulson generally agrees with the benefits of a strong US dollar, he acknowledges the need to address the global imbalances problem before it threatens economic and financial market stability. Does this imply an end to the “strong dollar policy?” It certainly could.

Most economists agree that a weaker dollar is a necessary but not sufficient condition to resolve the growth in global current account
imbalances. The orthodox solution provided by the G7 is for the US to reduce spending and increase savings, for Germany and Japan to implement pro-growth reform, and for Emerging Asia to embrace currency flexibility. By most accounts, the US dollar is overvalued against many Asian currencies—most notably the Chinese yuan. The challenge for Paulson will be to leverage his considerable experience in China to restart talks on Chinese currency reform. China is currently experiencing real GDP growth of 10% annually and monetary supply growth approaching 20%. Were Chinese CPI maintained at 10% annually for three years, the yuan would only require a modest 5% annual nominal revaluation to return global imbalances to sustainable levels. This could begin at the inception of China’s anticipated move to a wider currency trading band later this year.

With US Fed preparing to pause later this year and the ECB and BOJ expected to continue removing monetary accommodation, interest rate differentials are expected to narrow, removing an important element of support for the US dollar. Ironically, the greater Bernanke’s inflation-fighting credibility with financial markets, the less he will need to hike interest rates, and the sooner interest rate differentials
will begin to narrow and undermine the dollar. Similarly, the greater Paulson’s China credibility, the more successful he will be at forging a bilateral agreement on currency flexibility, and the sooner the dollar will resume its structural decline.

So when you hear people say the elite are going to milk everything from you. Here's just one example:

Higher Credit Card Rates May Be Lurking in Your Mailbox

Higher Credit Card Rates May Be Lurking in Your Mailbox

You'd think that an economic environment chock-full of interest rate cuts from the Fed would lead credit card issuers to gradually decrease the rates they charge us on our plastic. But no -- many cards have actually been raising their rates recently. Bill Hardekopf of LowCards.com, for example, has noted rates moving in directions other than down at cards from American Express (NYSE: AXP), JPMorgan Chase (NYSE: JPM), and Bank of America (NYSE: BAC).

What's going on? Well, there's been a bit of a financial crisis at many banks (you may have heard about it). It's related to their having issued a few regrettable mortgages to risky borrowers. So, perhaps feeling pressured, they're seeking out additional income from the likes of you and me, via the debt that we carry.

Taken from http://down2.nmag.cn/finance/Global....ember.2006.pdf