Oh Sh*t, The Dollar is Doomed
Over the last three months, banks put 63 percent of their new cash into euros and yen -- not the greenbacks -- a nearly complete reversal of the dollar's onetime dominance for reserves, according to Barclays Capital. The dollar's share of new cash in the central banks was down to 37 percent -- compared with two-thirds a decade ago.
Currently, dollars account for about 62 percent of the currency reserve at central banks -- the lowest on record, said the International Monetary Fund.
Bernanke could go down in economic history as the man who killed the greenback on the operating table.
After printing up trillions of new dollars and new bonds to stimulate the US economy, the Federal Reserve chief is now boxed into a corner battling two separate monsters that could devour the economy -- ravenous inflation on one hand, and a perilous recession on the other.
"He's in a crisis worse than the meltdown ever was," said Peter Schiff, president of Euro Pacific Capital. "I fear that he could be the Fed chairman who brought down the whole thing."
Investors and central banks are snubbing dollars because the greenback is kept too weak by zero interest rates and a flood of greenbacks in the global economy. They grumble that they've loaned the US record amounts to cover its mounting debt, but are getting paid back by a currency that's worth 10 percent less in the past three months alone. In a decade, it's down nearly one-third. [my emphasis]
Yesterday, the dollar had a mixed performance, falling slightly against the British pound to $1.5801 from $1.5846 Friday, but rising against the euro to $1.4779 from $1.4709 and against the yen to 89.85 yen from 89.78.
Um yeah, I really truly hate to break this to Zimbabwe Ben but I think his little scam has been sniffed out. Whatcha gonna do now, ZB?
Bernanke will not be able to print his way out of this one and quantitative easing only worked while everyone else was still stinging from the first blows of the financial crisis. Now that the global economy has begun to battle back against the United States' epidemic financial malaise, the jig is up and the Fed exit strategy is becoming a non-issue. It's too late to formulate an exit strategy, the doors are sealed shut and the dollars can't get vaporized fast enough to turn any of this around.
Dow at 10000? Sure, with these dollars we could have a 50000 Dow. Fuck it, let's just aim for 100000 and start pushing for 25% returns on T-bills.
Worthless paper is still worthless paper, no matter how many zeros you slap on it. I'm fairly sure that Zimbabwe Ben and the rest of the Dollar Doom Crew are going to have to learn that lesson the hard way.