Central Banks Abandoning The U.S. Dollar
Posted on July 13, 2010
Filed Under Critical Issues | Leave a Comment
If the U.S. dollar is no longer the reserve currency the government cannot continue the orgy of deficit spending. Taxes will skyrocket on the few remaining America workers to support our trillion dollar a year military and corporate handouts. Programs like public schools, food stamps and unemployment are chopped.
A new report from Morgan Stanley analyst Emma Lawson confirms what many had suspected: the dollar is firmly on its way to losing its status as the reserve currency of the world. We already knew that central banks have preferred gold to dollars, and that they’re even selling their gold for cash; now, according to Lawson’s data, it seems that those central banks prefer almost anything to dollars.
Lawson found that central banks have dropped their allocation to U.S. dollars by nearly a full percentage point to 57.3% from 58.1%, and calls this “unexpected given the global environment.” She adds, “over time we anticipate that reserve managers may reduce their holdings further.”
What is surprising is that the managers of those central banks aren’t buying traditional fall-backs like the euro, the British pound or the Japanese yen. Instead, she suggests they’re putting their faith in other dollars – the kind that come from Australia and Canada. The allocation to those currencies, which fall under “other” in the data, rose by a full percentage point to 8.5%, accounting almost exactly for the drop in the U.S. dollar allocation.
Call it diversification, if you must, but the trendline indicates that central banks are finally putting their money where their anti-dollar mouths are. The dollar has been in free-fall since 2007.
Read Full Article Here: Central banks start to abandon the U.S. dollar – Street Sweep: Fortune’s Wall Street Blog.
More than likely the United States will default and collapse. Congress can possibly work deals with those nations holding our debt such as China but they will entail Americans sending half their paycheck to Beijing.
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