The ECB will want the euro to be strong. The Japanese want a stronger Yen. Latin America is going south. The odd man out is the US. Our dollar is toast. The handwriting is on the wall.
Well, if the BOJ wants a strong Yen, they sure got their wish recently. However, given that they are selling yen and buying dollars to counteract the fall of the greenback, I have to disagree with your analysis (unless they are just trying to publicly "spoof" us.
It is tough to export your way out of recession with a strong Yen making your products more expensive to your larger exports markets, but also making your domestic markets vulnerable to your Asian neighbors cheaper imports. That hurts jobs, and jobs are what politics are all about.
The same situation strikes me as evident in Europe. The only way the Euro will maintain the confidence of member states is if the ECB pays attention to their unemployment situation there (8-12% in some countries). Voting for the Masstricht treaty was a political act by the people of Europe. It was a vote that a combined currency and ECB would create prosperity. Should the ECB fail on this promise, there is every reason to anticipate defections from the Euro or ignoring ECB bugetary deficit requirements.
Thus, my argument that to spur growth in Europe and assist the US in ending the deflationary spiral currently underway, both supranational currencies MUST act in some form of unison. Both will prosper or suffer based upon their cooperative actions. Thus also my argument for why gold would be a prime target for CB's. They don't want to see gold break out of a trading range because if the Goldbug gets loose, we all know that there isn't enough gold to back the current huge money supply at current price levels.
And they can always confiscate gold far easier than greenbacks. Btw, the Euro won't be introduced as hard currency until 2001. Thus, the dollar will likely remain strong through then.
Regards,
Ron
|
