Germany Accuses US of Indirectly Manipulating Dollar

Germany Accuses US of Indirectly Manipulating Dollar

www.cnbc.com

German Economy Minister Rainer Bruederle on Saturday took issue with what he called a U.S. policy of increasing liquidity, saying it indirectly manipulated exchange rates.

The U.S. Federal Reserve is widely expected to embark on a fresh round of asset purchases to prop up the economy.

(visit the link for the full news article)

That was quite a statement from the Germans. I'm starting to understand why Europe were reluctant to join American criticism of the Chinese.

I'm still not sure we are seeing a "currency war" - but I cannot help notice the isolation of the US, and her economy, from the rest of the world.

The next G20 meeting could be interesting.

www.cnbc.com
(visit the link for the full news article)

A divide does seem to be appearing...

Tho I am not sure anything will be said at the G20... still be will be interesting to see what is unsaid..

thanks for bringing this to my attention

And the Central European Bank directs the inflation rate of the Euro, obstructing any independent national government from adjusting deflation and inflation rates to the needed ones. So what's up with that? I think this woman needs to look into her own backyard instead of trying to suck up for a position in the European parliament.

reply to post by infinite


I think this is economics 101 but on a massive scale. What the article is getting at, as was the German minister, is that by increasing the money supply, you reduce the 'price' of the currency involved. Standard Supply & Demand.

Normally, issuance in pursuit of liquidity is standard fiscal policy for solving a contraction in the supply of LIQUID money. (Money not tied up in assets.)

However, what we have seen recently is something else - the VAST quantities of money issuance that has happened has not only injected massive amounts of liquid money into the market, but also muted any moves to speculate on the value of currency upwards. I very much doubt that Bernanke and others globally would have issued this currency without knowing that this would happen. Therefore, it begs the question, is this 'stagnation' designed to happen or not?

In my view, I think we're looking at a COST battle. Which country in the world is going to be cheapest to manufacture in? China are facing increasing costs with an increasingly affluent workforce - but still have a huge peasant population to work their way through. The U.S. are facing the same situation as 1980's Britain, with a massively declining manufacturing base - the U.S. government knows this, and also knows that in the traditional economic model, manufacturing as an aggregate wealth creation tool is unparalleled.

It's "Economy Wars" baby - this will form the crux of my next Economy Wars blog post I think.

Rev.

Originally posted by Zamini
And the Central European Bank directs the inflation rate of the Euro, obstructing any independent national government from adjusting deflation and inflation rates to the needed ones. So what's up with that? I think this woman needs to look into her own backyard instead of trying to suck up for a position in the European parliament.

One, the German finance Minister is a man..

And two, by directly controlling the inflationary issues at the source, the EURO remains a very stable currency, even with the market issues that are behind its problems. Inflation is a massive fear in the EUROZONE, especially with Germany who's last emergence from a real inflationary problem resulted in WW2.

So what if the other EUROZONE states cannot revalue their currencies? Wasn't that the reason for the single currency in the first place? If US states could revalue against each other, the USD would turn into several currencies pretty quickly and then fall apart.. Possibly along with much of the union.

Basically what this dude was pointing out is that while the US and Geithner are constantly bitching about the Chinese undervaluing the Renminbi, but yet the US are clearly doing the same thing.. And all the time asking the EU to keep the EURO strong in order to allow the US to export.

Basically talking through their financial a**es.

So this German 'Woman' has a point.

reply to post by Dermo

And two, by directly controlling the inflationary issues at the source, the EURO remains a very stable currency,

You tell that to Portugal and Greece and the rest of Europe for that matter.

What you say would be true IF there weren't NATIONAL politicians claiming they can better NATIONAL crisis situations, when the only power able to do that is the EUROPEAN CENTRAL BANK. And this EUROPEAN CENTRAL BANK, cares nothing for the people of Europe because it is RUN by the same BANKERS that brought you the 'financial crisis'.

Did you miss the fact that CHINA is offering to rescue Portugal(and by doing so they will, inevitably, be supporting more European countries - endebting them to China - Chinese Marshall plan anyone?) because the Euro/European Monetary Union/European Union is cracking on all sides?

Merkel won't say this. Even though she has to know it. As well as all other, redundant, heads of states.

The EURO was a ridiculous idea in the first place. To be honest though, the Euro most likely appeared ahead of its time.

Originally posted by The Revenant
reply to post by infinite

 

I think this is economics 101 but on a massive scale. What the article is getting at, as was the German minister, is that by increasing the money supply, you reduce the 'price' of the currency involved. Standard Supply & Demand.

Rev.

Surely that's a good thing by the States?

Maybe they've seen messed up Britain and the loss of its industry and put two and two together and decided to become competitive?

Shame UK didn't do the same when Labour got into power and sucked up the behinds of the City and supermarkets who drove down toWalmart prices = China kak and destroyed our manufacturing base in a decade

Good on America if they want to retain a competitive industry and cut the dollar

Originally posted by ufoorbhunter

Originally posted by The Revenant
reply to post by infinite

 

I think this is economics 101 but on a massive scale. What the article is getting at, as was the German minister, is that by increasing the money supply, you reduce the 'price' of the currency involved. Standard Supply & Demand.

Rev.

Surely that's a good thing by the States?

Sure, if you consider "quantitative easing" as a good thing, which is essentially printing billions (if not trillions) of American dollars out of thin air. This only benefits American finance capital (more opportunity to buy capital) while pissing off industrialized nations with honest currencies.

Originally posted by Dimitri Dzengalshlevi

Originally posted by ufoorbhunter

Originally posted by The Revenant
reply to post by infinite

 

I think this is economics 101 but on a massive scale. What the article is getting at, as was the German minister, is that by increasing the money supply, you reduce the 'price' of the currency involved. Standard Supply & Demand.

Rev.

Surely that's a good thing by the States?

Sure, if you consider "quantitative easing" as a good thing, which is essentially printing billions (if not trillions) of American dollars out of thin air. This only benefits American finance capital (more opportunity to buy capital) while pissing off industrialized nations with honest currencies.

But it must be a good thing if it keeps citizens in well paid engineering jobs that supply the world and their own nation instead of forcing them to work for the only local employer Asda (UK Walmart clone) to sell imported junk?

It may upset other "industrialized nations with honest currencies" but if it helps those at home what's so bad?

Originally posted by ufoorbhunter

Originally posted by Dimitri Dzengalshlevi

I think this is economics 101 but on a massive scale. What the article is getting at, as was the German minister, is that by increasing the money supply, you reduce the 'price' of the currency involved. Standard Supply & Demand.

Rev.

Surely that's a good thing by the States?

For one it is a form of economic warfare. It creates even more inflation by devaluing the American dollar.

Look at trade with Canada, for example. It's been theorized that the best value of the Canadian dollar for Canada is around $0.77 per US dollar. This leads to higher market of Canadian goods, and foreign investment (which plagues Canada). If the American government lowers their dollar, it raises ours and makes American products more appealing than expensive Canadian products (or even lowers tourism industry and its profit).

Mind you I am no expert on economics, but it appears not to be a good thing to everyone else in the world. If the US valued foreign relations then they probably wouldn't be engaging in economic warfare.