Friday, February 25, 2011

Dollar Not Even Started Against Non-reserve Currencies

Bernanke is not finished with his devaluation job until significant additional deterioration in USD on a broad basis.  With low rates and continued stability in the dollar, I can see how he can justify pursuing the bad monetary policies enabled by emerging market currency undervaluation and dollar reserves.

fed fred broad dollar

As I am assembling data on the country death spiral of lower domestic stock prices, higher bond rates, and >50% currency devaluation, I wonder how the dollar will survive an attack against itself or any other currency, since the first reaction of another currency attack will be to sell dollars in defense.

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