Yeah, we won . . . . . some, BUT it's already too late to save our foreign policy Bernanke and the FED'S new dollars took care of THAT!!

[PHILIP SCHNEIDER]

The Obama money policy has affected the rest of the world's economy. How long do you think they will remain friendly. How long will our long time allies remain side by side with us as we continue to try to police the rest of the planet's troubles? When their OWN dollars begin to lose value we will understand what it means to have a sane monetary policy.

QE2 risks currency wars and the end of dollar hegemony

As the US Federal Reserve meets today to decide whether its next blast of
quantitative easing should be $1 trillion or a more cautious $500bn, it does
so knowing that China and the emerging world view the policy as an attempt
to drive down the dollar.

By Ambrose Evans-Pritchard, International Business Editor

Published: 9:56PM GMT 01 Nov 2010

QE2 risks currency wars and the end of dollar hegemony
Photo: AFP

David Bloom, currency chief at HSBC, said the root problem is lack of
underlying demand in the global
economy, leaving Western economies trapped near stalling speed. "There
are no policy levers left. Countries are having to tighten fiscal policy,
and interest rates are already near zero. The last resort is a weaker
currency, so everybody is trying to do it," he said.

Pious words from G20
summit of finance ministers last month calling for the world to "refrain"
from pursuing trade advantage through devaluation seem most honoured in the
breach.

Taiwan intervened on Monday to cap the rise of its currency, while Korea's
central bank chief said his country is eyeing capital controls as part of
its "toolkit" to stem the flood of Fed-created money leaking out
of the US and sloshing into Asia. Brazil has just imposed a 2pc tax on
inflows into both bonds and equities – understandably, since the real has
risen by 35pc against the dollar this year and the country has a current
account deficit.

"It is becoming harder to mop up the liquidity flowing into these
countries," said Neil Mellor, of the Bank of New York Mellon. "We
fully expect more central banks to impose capital controls over the next
couple of months. That is the world we live in," he said. Globalisation
is unravelling before our eyes.

Each case is different. For the 40-odd countries pegged to the dollar or
closely linked by a "dirty float", the Fed's lax policy is causing
havoc. They are importing a monetary policy that is far too loose for the
needs of fast-growing economies. What was intended to be an anchor of
stability has become a danger.

Hong Kong's dollar peg, dating back to the 1960s, makes it almost impossible
to check a wild credit boom. House prices have risen 50pc since January
2009, despite draconian curbs on mortgages. Barclays Capital said Hong Kong
may switch to a yuan peg within two years.

Mr Bloom said these countries are under mounting pressure to break free from
the dollar. "They are all asking themselves whether these pegs are a
relic of the past," he said.

China faces a variant of the problem with its mixed currency basket, a sort of "crawling
peg". Commerce minister Chen Deming said last week that US dollar
issuance is "out of control". It is causing a surge of imported
inflation in China.

Critics in the US Congress say China could solve that particular problem very
quickly by letting the yuan rise enough to bring the country's $180bn trade
surplus into balance.

They say the strategy of holding down the yuan to underpin China's export-led
model is the real source of galloping wage and price inflation on China's
eastern seaboard. The central bank has accumulated $2.5 trillion of foreign
bonds but lacks the sophisticated instruments to "sterilise" these
purchases and stem inflationary "blow-back".

But whatever the rights and wrongs of the argument, the reality is that a
chorus of Chinese officials and advisers is demanding that China switch
reserves into gold or forms of oil. As this anti-dollar revolt gathers
momentum worldwide, the US risks losing its "exorbitant privilege"
of currency hegemony – to use the term of Charles de Gaulle.

The innocent bystanders caught in the crossfire of Fed policy are poor
countries such as India, where primary goods make up 60pc of the price index
and food inflation is now running at 14pc. It is hard to gauge the impact of
a falling dollar on commodities, but the pattern in mid-2008 was that it led
to oil, metal, and grain price rises with multiple leverage. The core
victims were the poorest food-importing countries in Africa and South Asia.
Tell them that QE2 brings good news.

So the question that Ben Bernanke and his colleagues should ask themselves is
whether they have thought through the global ramifications of their actions,
and how the strategic consequences might rebound against America itself.

*HARDLY!

[Katy]

His game is still on course. He planned to bankrupt us and usher in the NWO. All while he is on a trip to India.