Hello Gregor, I have always found it difficult to hold JPY amd CHF. Effectively zero interest rate on a fiat currency is not a powerful incentive. Each time I do so I have had to eventually and soon ask myself, "why am I not converting to gold", especially when the rest of the currencies are not paying much more than the Yen, which is the case. Bottom line, interest rates are uniformly low, and so now just about all risks are corrolated, given that the underlying assets are mostly pinned at a high.
I hold some Yen because it is an Asian currency that is somewhat global in nature. I cannot hold it for very long. I hold some CHF because I have some obligations that requires the paper.
I am not sure, but the Richard Russell theory of Dollar Bull During Deflation may again work out as it had during May of 2006.
The fact of the matter is that the currencies had been grinding against each other since 2000, and against gold. Subtract out the noise, gold wins, year after year, and Gold is as good as or, when one can emotionally take it, better than cash - a take-away lesson.
I hold physical gold because it seems to be a good place for excess savings and surplus capital, and because we are moving toward the event singularity that will be universal monetary reset. I want to be able to read the news that day during breakfast in perfect serenity.
I figure Dollar still stands because it is the standard, and is neither the Euro nor the Yen. Even so, Dollar has been losing against gold.
I am learning, and applying the dusty book and musty archive scribblings from long ago. The whole fiat currency inflation process has not only been interesting to me but good, so far.
Now, if history is any guide, if human nature has not changed in any substantive way, and math remains substantively the same as eons ago, then what ought to eventually follow is evaporation, confiscation, redistribution, dissipation, and .... revolution of some sort, followed by dark interregnum and monetary reset. It is what the books say.
I reckon the fact that the current episode is global in nature and the economies doing the printing are the largest in the galaxy should not be able to prevent what ought to happen, but just guarantee that the episode will be biblically enormous.
BTW, on the following, I think there is much that ought to be considered per your suggestion, and imo, Paulson does not believe much of what he says, or is trying best to delay the eventualities, whereas Bernanke is an outright straightforward moron - and/or he is the straightest talking guy in history ('secret weapon printing press' - how much straighter can one get?).
Paulson is the designated point-man for the USA on China, and so he does his job which he signed on to do for the good of USA and that also has as a benefit that he gets to save some serious moolah on taxes otherwise due from the unloading of his GS shares.
gregor.us
Monday 18 December 2006 15:08 GMT
A tremendous amount of ink was spilled over this weekend, attempting to decipher the true intentions of Paulson's and Bernanke's visit to China. There is a cottage industry on the
internet that produces these sorts of theories. But the vast majority have lapsed into a kind of reflexive, oppositional theory-making that has made a reductio ad absurdum now
of Fed and Treasury watching.
Accordingly, none of the stated reasons for the visit could possibly have been true. When Paulson said a stronger Yuan would be beneficial to China, he didn't mean it. When
Bernanke said a US Dollar-linked Yuan was effectively a subsidy--ooops, bad word, let's change that to either "undervalued" or "inflexible"--well, no matter because Ben didn't mean that either.
After so many years of applying complexity-theory to the public statements of government officials, I think it's intriguing at times to take these people at their word. Why can't a Fed chairman believe that making the Yuan stronger against the dollar will improve the US trade deficit? Even if that's wrong? I mean, it's not like we've never had a Fed
Chairman who held all sorts of faulty theories, right? And why can't Paulson believe this as well? Many members of Congress believe it, because their constituents believe it.
Of course, neither Paulson nor Bernanke have to believe it very deeply. And that's probably where some of the nuance comes in to play, on this issue. Very simply put, the income
disparities between China and the US are still too large for China alone to shoulder the rebalancing of the US trade deficit, which is of course unfolding against the world,
not just China. Additionally, its inescapable that Paulson and Bernanke would have at least some appreciation for the high-wire act they are trying to effect with China, as they publicly call for a stronger Yuan, while maintaining they still want a stable dollar. It's hard to tell the dollar to weaken only against the Yuan, and nothing else.
One wonders that a kind of solution was revealed Friday, when a very large US-weighted order for nuclear power construction was announced. The deal, with Westinghouse and Shaw Group, also had implications for GE, which made its biggest one day gain in two years on high volume. If the Chinese are willing to let their Yuan rise a little, but not a lot, and Bernanke and Paulson expressed strongly the protectionist pressures that are bubbling upward here in Congress, might a solution be for China to weight its infrastructure spending toward US based firms? We've already established that they cannot buy our oil and gas companies. Are we telling them we'll be sated however on the Yuan issue, if they buy anything else from us? And lots of it?
What are the implications here for the US stock market? Are we suggesting they also re-weight their recycling of dollars from US Treasuries, to US produced infrastructure? After 5 years of hibernation, is it time to buy GE?
Finally, I want to note that the price of Uranium leapt last week by $7.00 per pound, in its largest single price gain since 1968, to settle at $72.00.
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