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MoneyWorksforMe (< 20)

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5

The World's New Reserve Currency -- The Chinese Yuan

December 08, 2013 – Comments (3)

I think many have lost sight of the multi-pronged approach of QE. Many “get” the idea of keeping interest rates low, but what is commonly overlooked is the effect of this policy on China’s economy. The fed, in an attempt to re-balance trade between the U.S. and Chinese economy, implemented QE, knowing full well the inflation would show up in China (due to the currency peg) and hopefully force them to tighten (strengthen the yuan vs. the dollar). How many times have we heard from people (Schiff et al), that China is importing US inflation? This is an extremely important point and it is a symptom of QE due to China’s peg. In turn, the millions of jobs lost to China during the previous decade would begin coming back–or so they hoped, as the US regained some of the export advantage it had lost. This has worked to a degree. BUT the Chinese have become an enormous purchaser of gold. So much so that they advocate their citizens buy it. Why? Well gold was the counter to the fed’s QE policy. This has served two brilliant purposes: 1.) China could insulate themselves from the inflation that they were importing by maintaining the peg via holding gold. Gold buys the Chinese time to set up a plan for yuan revaluation. 2.) China will not have to relinquish much of the power they had gained back to the U.S., via trade imbalances. A gold backed yuan will ensure China takes the stage as the world’s new reserve currency. Even though trade will be re-balanced, China will maintain all the power and wealth.  [more]

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5

Dr. Michael J. Burry--"A Brutal Hangover is Inevitable"

June 23, 2012 – Comments (4)

 I found this to not only be very inspirational, but also very insightful. Worth every second of your time...  [more]

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11

Gold and Silver Beginning next Leg up with USD Strength

January 15, 2012 – Comments (7)

Looks like a very similar set of waves (same pattern,smaller amplitudes) in gold occurred the last time gold rallied back in late 2009 to mid 2010. If you have the time pull up a 3 year chart of both the USDX and Gold. Gold actually developed a positive correlation with the dollar towards the latter part of the dollar's rally (around Feb 2010) at around the same levels on the USDX we sit at today--I believe the same will occur this time. Why? Two reasons: 1.) Prices in precious metals fell significantly, very quickly, as the dollar began its rally, creating good technical buy levels, on oversold conditions, particularly in silver. 2.) As the dollar rallies USGDP falls, as exports decrease, and private consumption decreases--a somewhat deflationary result, due to the psychological response of "why buy now, while things are getting cheaper over time". As GDP falls, and earnings begin to slip the fed ratchets up rhetoric in regards to stepping in to weaken the dollar. A weak dollar is the fed's last /only attempt at aiding GDP numbers--it's the only tool left.  [more]

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7

The Global Monetary System--Sitting On Thin Ice

January 02, 2012 – Comments (2)

I'm not sure how many of you Fools, had heard of this guy, prior to this post, but I was fortunate enough to come across him myself, while looking for a new economics book to purchase for my kindle. After seeing the book on Amazon, I subsequently performed some research on the author finding his personal blog: http://papermoneycollapse.com/. I read and watched several of his blog posts, and was delighted but what I found--so much so that I promptly purchased his new book "Paper Money Collapse" and felt overly compelled to introduce him to the Fool community.  [more]

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