World Bank and IMF Join Global Attack on the Dollar!

Dollar Reaches Breaking Point as Banks Shift Reserves

October 12, 2009

Bloomberg - Central banks flush with record reserves are increasingly snubbing dollars in favor of euros and yen, further pressuring the greenback after its biggest two-quarter rout in almost two decades.

Policy makers boosted foreign currency holdings by $413 billion last quarter, the most since at least 2003, to $7.3 trillion, according to data compiled by Bloomberg. Nations reporting currency breakdowns put 63 percent of the new cash into euros and yen in April, May and June, the latest Barclays Capital data show. That’s the highest percentage in any quarter with more than an $80 billion increase.

World leaders are acting on threats to dump the dollar while the Obama administration shows a willingness to tolerate a weaker currency in an effort to boost exports and the economy as long as it doesn’t drive away the nation’s creditors. The diversification signals that the currency won’t rebound anytime soon after losing 10.3 percent on a trade-weighted basis the past six months, the biggest drop since 1991.

“Global central banks are getting more serious about diversification, whereas in the past they used to just talk about it,” said Steven Englander, a former Federal Reserve researcher who is now the chief U.S. currency strategist at Barclays in New York. “It looks like they are really backing away from the dollar.”

The dollar’s 37 percent share of new reserves fell from about a 63 percent average since 1999. Englander concluded in a report that the trend “accelerated” in the third quarter. He said in an interview that “for the next couple of months, the forces are still in place” for continued diversification.

America’s currency has been under siege as the Treasury sells a record amount of debt to finance a budget deficit that totaled $1.4 trillion in fiscal 2009 ended Sept. 30...

Developing countries have likely sold about $30 billion for euros, yen and other currencies each month since March, according to strategists at Bank of America-Merrill Lynch.

That helped reduce the dollar’s weight at central banks that report currency holdings to 62.8 percent as of June 30, the lowest on record, the latest International Monetary Fund data show. The quarter’s 2.2 percentage point decline was the biggest since falling 2.5 percentage points to 69.1 percent in the period ended June 30, 2002.

“The diversification out of the dollar will accelerate,” said Fabrizio Fiorini, a money manager who helps oversee $12 billion at Aletti Gestielle SGR SpA in Milan. “People are buying the euro not because they want that currency, but because they want to get rid of the dollar. In the long run, the U.S. will not be the same powerful country that it once was.”

Central banks’ moves away from the dollar are a temporary trend that will reverse once the Fed starts raising interest rates from near zero, according to Christoph Kind, who helps manage $20 billion as head of asset allocation at Frankfurt Trust in Germany...

The median estimate of more than 40 economists and strategists is for the dollar to end the year little changed at $1.47 per euro, and appreciate to 92 yen, from 89.97 today.

Englander at London-based Barclays, the world’s third- largest foreign-exchange trader, predicts the U.S. currency will weaken 3.3 percent against the euro to $1.52 in three months. He advised in March, when the dollar peaked this year, to sell the currency. Standard Chartered, the most accurate dollar-euro forecaster in Bloomberg surveys for the six quarters that ended June 30, sees the greenback declining to $1.55 by year-end.

The dollar’s reduced share of new reserves is also a reflection of U.S. assets’ lagging performance as the country struggles to recover from the worst recession since World War II.

Since Jan. 1, 61 of 82 country equity indexes tracked by Bloomberg have outperformed the Standard & Poor’s 500 Index of U.S. stocks, which has gained 18.6 percent. That compares with 70.6 percent for Brazil’s Bovespa Stock Index and 49.4 percent for Hong Kong’s Hang Seng Index.

Treasuries have lost 2.4 percent, after reinvested interest, versus a return of 27.4 percent in emerging economies’ dollar- denominated bonds, Merrill Lynch & Co. indexes show.

The growth of global reserves is accelerating, with Taiwan’s and South Korea’s, the fifth- and sixth-largest in the world, rising 2.1 percent to $332.2 billion and 3.6 percent to $254.3 billion in September, the fastest since May. The four biggest pools of reserves are held by China, Japan, Russia and India.

China, which controlled $2.1 trillion in foreign reserves as of June 30 and owns $800 billion of U.S. debt, is among the countries that don’t report allocations.

“Unless you think China does things significantly differently from others,” the anti-dollar trend is unmistakable, Englander said.

Englander’s conclusions are based on IMF data from central banks that report their currency allocations, which account for 63 percent of total global reserves. Barclays adjusted the IMF data for changes in exchange rates after the reserves were amassed to get an accurate snapshot of allocations at the time they were acquired.

Investors can make money by following central banks’ moves, according to Barclays, which created a trading model that flashes signals to buy or sell the dollar based on global reserve shifts and other variables. Each trade triggered by the system has average returns of more than 1 percent.

Bill Gross, who runs the $186 billion Pimco Total Return Fund, the world’s largest bond fund, said in June that dollar investors should diversify before central banks do the same on concern that the U.S.’s budget deficit will deepen.

“The world is changing, and the dollar is losing its status,” said Aletti Gestielle’s Fiorini. “If you have a 5- year or 10-year view about the dollar, it should be for a weaker currency.”

The Truth on the Dollar Demise

October 11, 2009

Infowars - According to journalist Robert Fisk, the Arabs, China, and Russia may deny it but eventually the dollar as the global reserve currency is toast.

Gerald Celente: The Dollar Is Finished

October 8, 2009

Russia Today - If the dollar collapses, it would spell economic disaster not just for the United States, but for the world, says Gerald Celente, director of the Trade Research Institute.

“It is more than just the demise of the dollar – this is going to be felt worldwide. There’s a major financial crisis ahead. The United States, the world’s superpower, is failing on its most basic level,” Celente told RT.

And the reason for the future demise of the American currency, Celente says, is the disproportionate financial system:

“We can’t print money out of thin air, backed by nothing and producing practically nothing.”

The researcher believes the crisis of the dollar is irreversible, since America is losing its gold – the value of its currency.

The IMF Catapults from Shunned Agency to Global Central Bank

October 6, 2009

Ellen Brown - “A year ago,” said law professor Ross Buckley on Australia’s ABC News last week, “nobody wanted to know the International Monetary Fund. Now it’s the organiser for the international stimulus package which has been sold as a stimulus package for poor countries.”

The IMF may have catapulted to a more exalted status than that. According to Jim Rickards, director of market intelligence for scientific consulting firm Omnis, the unannounced purpose of last week’s G20 Summit in Pittsburgh was that “the IMF is being anointed as the global central bank.” Rickards said in a CNBC interview on September 25 that the plan is for the IMF to issue a global reserve currency that can replace the dollar.

“They’ve issued debt for the first time in history,” said Rickards. “They’re issuing SDRs. The last SDRs came out around 1980 or ‘81, $30 billion. Now they’re issuing $300 billion. When I say issuing, it’s printing money; there’s nothing behind these SDRs.”

SDRs, or Special Drawing Rights, are a synthetic currency originally created by the IMF to replace gold and silver in large international transactions. But they have been little used until now. Why does the world suddenly need a new global fiat currency and global central bank?

Rickards says it because of “Triffin’s Dilemma,” a problem first noted by economist Robert Triffin in the 1960s. When the world went off the gold standard, a reserve currency had to be provided by some large-currency country to service global trade. But leaving its currency out there for international purposes meant that the country would have to continually buy more than it sold, running large deficits; and that meant it would eventually go broke. The U.S. has fueled the world economy for the last 50 years, but now it is going broke. The U.S. can settle its debts and get its own house in order, but that would cause world trade to contract. A substitute global reserve currency is needed to fuel the global economy while the U.S. solves its debt problems, and that new currency is to be the IMF’s SDRs.

That’s the solution to Triffin’s dilemma, says Rickards, but it leaves the U.S. in a vulnerable position. If we face a war or other global catastrophe, we no longer have the privilege of printing money. We will have to borrow the global reserve currency like everyone else, putting us at the mercy of the global lenders.

To avoid that, the Federal Reserve has hinted that it is prepared to raise interest rates, even though that would mean further squeezing the real estate market and the real economy. Rickards pointed to an oped piece by Fed governor Kevin Warsh, published in The Wall Street Journal on the same day the G20 met. Warsh said that the Fed would need to raise interest rates if asset prices rose – which Rickards interpreted to mean gold, the traditional go-to investment of investors fleeing the dollar.

“Central banks hate gold because it limits their ability to print money,” said Rickards. If gold were to suddenly go to $1,500 an ounce, it would mean the dollar was collapsing. Warsh was giving the market a heads up that the Fed wasn’t going to let that happen. The Fed would raise interest rates to attract dollars back into the country. As Rickards put it, “Warsh is saying, ‘We sort of have to trash the dollar, but we’re going to do it gradually.’ . . . Warsh is trying to preempt an unstable decline in the dollar. What they want, of course, is a stable, steady decline.”

What about the Fed’s traditional role of maintaining price stability? It’s nonsense, said Rickards.

“What they do is inflate the dollar to prop up the banks.” The dollar has to be inflated because there is more debt outstanding than money to pay it with.

The government currently has contingent liabilities of $60 trillion. “There’s no feasible combination of growth and taxes that can fund that liability,” Rickards said. The government could fund about half that in the next 14 years, which means the dollar needs to be devalued by half in that time.

The Dollar Needs to be Devalued by Half?

Reducing the value of the dollar by half means that our hard-earned dollars are going to go only half as far, something that does not sound like a good thing for Main Street. Indeed, when we look more closely, we see that the move is not designed to serve us but to serve the banks.

Why does the dollar need to be devalued?

It is to compensate for a dilemma in the current monetary scheme that is even more intractable than Triffin’s, one that might be called a fraud. There is never enough money to cover the outstanding debt, because all money today except coins is created by banks in the form of loans, and more money is always owed back to the banks than they advance when they create their loans. Banks create the principal but not the interest necessary to pay their loans back.

The Fed, which is owned by a consortium of banks and was set up to serve their interests, is tasked with seeing that the banks are paid back; and the only way to do that is to inflate the money supply to create the dollars to cover the missing interest. But that means diluting the value of the dollar, which imposes a stealth tax on the citizenry; and the money supply is inflated by making more loans, which adds to the debt and interest burden that the inflated money supply was supposed to relieve. The banking system is basically a pyramid scheme, which can be kept going only by continually creating more debt.

The IMF’s $500 Billion Stimulus Package: Designed to Help Developing Countries or the Banks?

And that brings us back to the IMF’s stimulus package discussed last week by Professor Buckley. The package was billed as helping emerging nations hard hit by the global credit crisis, but Buckley doubts that that is what is really going on. Rather, he says, the $500 billion pledged by the G20 nations is “a stimulus package for the rich countries’ banks.”

Why does he think that? Because stimulus packages are usually grants. The money coming from the IMF will be extended in the form of loans.

These are loans that are made by the G20 countries through the IMF to poor countries. They have to be repaid and what they’re going to be used for is to repay the international banks now . . . [T]he money won’t really touch down in the poor countries. It will go straight through them to repay their creditors . . . But the poor countries will spend the next 30 years repaying the IMF.

Basically, said Professor Buckley, the loans extended by the IMF represent an increase in seniority of the debt. That means developing nations will be even more firmly locked in debt than they are now.

At the moment the debt is owed by poor countries to banks, and if the poor countries had to, they could default on that. The bank debt is going to be replaced by debt that’s owed to the IMF, which for very good strategic reasons the poor countries will always service . . . The rich countries have made this $500 billion available to stimulate their own banks, and the IMF is a wonderful party to put in between the countries and the debtors and the banks.

Not long ago, the IMF was being called obsolete. Now it is back in business with a vengeance; but it’s the old unseemly business of serving as the collection agency for the international banking industry. As long as third world debtors can service their loans by paying the interest on them, the banks can count the loans as “assets” on their books, allowing them to keep their pyramid scheme going by inflating the global money supply with yet more loans. It is all for the greater good of the banks and their affiliated multinational corporations; but the $500 billion in funding is coming from the taxpayers of the G20 nations, and the foreseeable outcome will be that the United States will join the ranks of debtor nations subservient to a global empire of central bankers.

The Demise of the Dollar

October 6, 2009

In a graphic illustration of the new world order, Arab states have launched secret moves with China, Russia and France to stop using the US currency for oil trading.

The Independent - In the most profound financial change in recent Middle East history, Gulf Arabs are planning – along with China, Russia, Japan and France – to end dollar dealings for oil, moving instead to a basket of currencies including the Japanese yen and Chinese yuan, the euro, gold and a new, unified currency planned for nations in the Gulf Co-operation Council, including Saudi Arabia, Abu Dhabi, Kuwait and Qatar.

Secret meetings have already been held by finance ministers and central bank governors in Russia, China, Japan and Brazil to work on the scheme, which will mean that oil will no longer be priced in dollars.

The plans, confirmed to The Independent by both Gulf Arab and Chinese banking sources in Hong Kong, may help to explain the sudden rise in gold prices, but it also augurs an extraordinary transition from dollar markets within nine years.

The Americans, who are aware the meetings have taken place – although they have not discovered the details – are sure to fight this international cabal which will include hitherto loyal allies Japan and the Gulf Arabs. Against the background to these currency meetings, Sun Bigan, China's former special envoy to the Middle East, has warned there is a risk of deepening divisions between China and the US over influence and oil in the Middle East.

"Bilateral quarrels and clashes are unavoidable," he told the Asia and Africa Review. "We cannot lower vigilance against hostility in the Middle East over energy interests and security."

This sounds like a dangerous prediction of a future economic war between the US and China over Middle East oil – yet again turning the region's conflicts into a battle for great power supremacy. China uses more oil incrementally than the US because its growth is less energy efficient. The transitional currency in the move away from dollars, according to Chinese banking sources, may well be gold. An indication of the huge amounts involved can be gained from the wealth of Abu Dhabi, Saudi Arabia, Kuwait and Qatar who together hold an estimated $2.1 trillion in dollar reserves.

The decline of American economic power linked to the current global recession was implicitly acknowledged by the World Bank president Robert Zoellick:

"One of the legacies of this crisis may be a recognition of changed economic power relations," he said in Istanbul ahead of meetings this week of the IMF and World Bank.

But it is China's extraordinary new financial power – along with past anger among oil-producing and oil-consuming nations at America's power to interfere in the international financial system – which has prompted the latest discussions involving the Gulf states.

Brazil has shown interest in collaborating in non-dollar oil payments, along with India. Indeed, China appears to be the most enthusiastic of all the financial powers involved, not least because of its enormous trade with the Middle East.

China imports 60 per cent of its oil, much of it from the Middle East and Russia. The Chinese have oil production concessions in Iraq – blocked by the US until this year – and since 2008 have held an $8bn agreement with Iran to develop refining capacity and gas resources. China has oil deals in Sudan (where it has substituted for US interests) and has been negotiating for oil concessions with Libya, where all such contracts are joint ventures.

Furthermore, Chinese exports to the region now account for no fewer than 10 per cent of the imports of every country in the Middle East, including a huge range of products from cars to weapon systems, food, clothes, even dolls.

In a clear sign of China's growing financial muscle, the president of the European Central Bank, Jean-Claude Trichet, yesterday pleaded with Beijing to let the yuan appreciate against a sliding dollar and, by extension, loosen China's reliance on US monetary policy, to help rebalance the world economy and ease upward pressure on the euro.

Ever since the Bretton Woods agreements – the accords after the Second World War which bequeathed the architecture for the modern international financial system – America's trading partners have been left to cope with the impact of Washington's control and, in more recent years, the hegemony of the dollar as the dominant global reserve currency.

The Chinese believe, for example, that the Americans persuaded Britain to stay out of the euro in order to prevent an earlier move away from the dollar. But Chinese banking sources say their discussions have gone too far to be blocked now.

"The Russians will eventually bring in the rouble to the basket of currencies," a prominent Hong Kong broker told The Independent. "The Brits are stuck in the middle and will come into the euro. They have no choice because they won't be able to use the US dollar."

Chinese financial sources believe President Barack Obama is too busy fixing the US economy to concentrate on the extraordinary implications of the transition from the dollar in nine years' time. The current deadline for the currency transition is 2018.

The US discussed the trend briefly at the G20 summit in Pittsburgh; the Chinese Central Bank governor and other officials have been worrying aloud about the dollar for years. Their problem is that much of their national wealth is tied up in dollar assets.

"These plans will change the face of international financial transactions," one Chinese banker said. "America and Britain must be very worried. You will know how worried by the thunder of denials this news will generate."

Iran announced late last month that its foreign currency reserves would henceforth be held in euros rather than dollars. Bankers remember, of course, what happened to the last Middle East oil producer to sell its oil in euros rather than dollars. A few months after Saddam Hussein trumpeted his decision, the Americans and British invaded Iraq.

Oil States Say There Are No Talks on Replacing Dollar

October 6, 2009

Reuters - Big oil producing nations denied on Tuesday a British newspaper report that Gulf Arab states were in secret talks with Russia, China, Japan and France to replace the U.S. dollar with a basket of currencies in trading oil.

The U.S. dollar eased in response to the report, which was written by The Independent's (see following story) Middle East correspondent Robert Fisk and cited unidentified sources in Gulf Arab states and Chinese banking sources in Hong Kong.

It said the proposal was for trade in crude oil to move over nine years to a basket of currencies including the Japanese yen, the Chinese yuan, the euro, gold and a new, unified currency planned for nations in the Gulf Co-operation Council, which includes Saudi Arabia and Kuwait.

But top officials of Saudia Arabia and Russia, speaking on the sidelines of International Monetary Fund meetings in Istanbul, denied there were such talks.

Asked by reporters about the newspaper story, Saudi Arabia's central bank chief Muhammad al-Jasser said: "Absolutely incorrect." He repeated the same response when asked whether Saudi Arabia was in such talks.

Russia's deputy finance minister Dmitry Pankin said: "We did not discuss this at all."

Algerian Finance Minister Karim Djoudi told Reuters: "Oil producing countries need to stabilize revenues but...I don't see a need for oil trade to be denominated differently. But we are at the IMF conference where all sorts of subjects are raised and discussed," he added.

The U.S. dollar slipped in the wake of the newspaper story. The euro edged up as high as $1.4749 in European trade from $1.4662 before the story appeared.

The euro fell back to $1.4701 when the Saudi Arabian and Russian officials denied the story, but it subsequently resumed strengthening because of the currency market's continued concern over the dollar's trend.

Russia has in the past publicly raised the idea of shifting its oil trade away from the dollar because of the weakness and volatility of the currency, which has been undermined by the U.S. trade and budget deficits.

China, holder of the world's biggest foreign exchange reserves, has suggested that in the long term, the dollar should lose its role as the globe's top reserve currency.

A main focus of the talks among global finance officials in Istanbul has been correcting big trade imbalances that can destabilize the world economy. Many economists think the dollar may have to weaken further to reduce the imbalances.

However, analysts said that while individual countries would find it relatively easy to stop using the dollar in settling their oil trades, as Iran has already done, replacing the currency in which oil is priced would require a massive effort.

"This...shows that central banks not just in Asia are looking to diversify away from the dollar."

Iran began settling most of its crude oil exports in non-dollar currencies, primarily the euro, several years ago, but the actual price for its oil is still set in dollar terms...

Gulf Arabs, China, Russia, Japan and France Plan to End Oil Trading in Dollars

October 5, 2009

The Independent - In the most profound financial change in recent Middle East history, Gulf Arabs are planning – along with China, Russia, Japan and France – to end dollar dealings for oil, moving instead to a basket of currencies including the Japanese yen and Chinese yuan, the euro, gold and a new, unified currency planned for nations in the Gulf Co-operation Council, including Saudi Arabia, Abu Dhabi, Kuwait and Qatar.

Secret meetings have already been held by finance ministers and central bank governors in Russia, China, Japan and Brazil to work on the scheme, which will mean that oil will no longer be priced in dollars.

The plans, confirmed to The Independent by both Gulf Arab and Chinese banking sources in Hong Kong, may help to explain the sudden rise in gold prices, but it also augurs an extraordinary transition from dollar markets within nine years...

U.S. Economic Decline Forges New World Order

October 4, 2009

Agence France-Presse - The crisis is redrawing the world map of economic power as the influence of US consumer spending declines and major emerging markets like China and India take the lead, finance chiefs said.

"One of the legacies of this crisis may be a recognition of changed economic power relations," World Bank president Robert Zoellick said Friday in Istanbul ahead of annual meetings of the World Bank and the International Monetary Fund.

"Recent forecasts show that China and India are helping to pull the global economy out of recession.... A multipolar economy less reliant on the US consumer will be a more stable world economy," he added.

Consumer spending accounts for around two-thirds of economic activity in the United States -- by far the world's biggest economy -- and experts say lower spending could have radical effects on the US's world standing.

The IMF on Thursday forecast emerging and developing economies would grow 5.1 percent in 2010 -- in contrast with just 1.3 percent in advanced economies.

China's economy was projected to grow by 9.0 percent next year and India's by 6.4 percent -- far ahead of 1.5 percent expansion in the US economy.

"The American engine is not as strong as it was before," IMF managing director Dominique Strauss-Kahn said in a speech in which he called for emerging markets to be given more say in the IMF's decisions.

"Emerging economies are becoming more and more the real partners," he said.

In a BBC World debate on the crisis held in Istanbul, Niall Ferguson, a professor of business administration at Harvard Business School in the United States, said:

"The crisis has accelerated a shift from west to east."

"That means rebalancing not only economically... but rebalancing geopolitically, which I think makes some people nervous," Ferguson said.

"For the foreseeable future the US will be growing at a much lower rate while China is in fact growing at a much faster rate," he added.

The shift is having far-reaching effects around the world.

In Latin America, IMF economists said the crisis is affecting countries differently depending on whether, like Mexico, they are more closely tied to the United States or, like Brazil, they have more links with China.

"If it was not for China we wouldn't have seen positive growth in the second quarter in Brazil," Ilan Goldfajn, chief economist at Brazilian bank Itau Unibanco, said at an IMF-organised conference in Istanbul.

Goldfajn said the world would now start to "rebalance towards Asia."

Marek Belka, head of the IMF's European department, cautioned however that for European countries, "demand from Asia is not enough -- the recovery rests on the shoulders of European consumers and investors."

This upheaval is changing institutions too, with the G20 group of developed and emerging economies turning into the main forum for international economic policy and strengthening the IMF as a guarantor of global stability.

The IMF has bailed out countries around the world in recent months and its members have tripled its lending resources to 750 billion dollars (515 billion euros).

Strauss-Kahn has more ambitious plans yet and is seeking more funding to strengthen the IMF's role as a global lender of last resort.

"Our ultimate goal is financial and economic stability," he said in a speech in Istanbul at which he outlined plans to even out global economic imbalances.

The G20 summit in the US city of Pittsburgh last month also agreed to give more voting shares to emerging and developing economies in the IMF and the World Bank -- a reflection of the shift in economic power.

The World Bank's Zoellick has also argued that developing countries in Southeast Asia, Latin Amercia, the Middle East and Africa should be seen as future "engines of growth" rather than recipients of charity from rich nations.

In a recent speech in Washington, Zoellick said:

"The old international economic order was struggling to keep up with change before the crisis.... It is time we caught up and moved ahead."

World Bank and IMF Join Global Attack on the Dollar!

October 4, 2009

Larry Edelson - In my emails to you over the past couple of weeks, I’ve shown you why Washington has no choice but to devalue the dollar — and how global leaders and even the United Nations have joined the attack on the greenback by demanding it be replaced as the world’s reserve currency.

Now, just this week, the International Monetary Fund and the World Bank have begun adding their voices to the international choir calling for a new global reserve currency:

Last week, World Bank President Robert Zoellick warned that the dollar’s status will be challenged and shouldn’t be taken for granted.

According to Turkish Deputy Prime Minister Ali Babacan, it’s likely that the role of special drawing rights (SDRs) based on a basket of currencies will be discussed as an alternative to the dollar during meetings of the World Bank and IMF in Istanbul next week.

Meanwhile, global governments, central banks, companies and investors continue to slash their dollar holdings. According to the IMF, in April through June of this year, the greenback’s share of global currency reserves fell to the lowest level in a decade. Holdings of euros, in contrast, rose to a new all-time record high.

All this adds weight and momentum to the devaluation of the dollar. It is DEFINITELY ON THE TABLE.

Indeed, for the first time I can remember, the G-7 finance officials, meeting this weekend, are rumored to be breaking with tradition and choosing not to release a statement on the global economy and currencies. I feel this is an extremely significant development: At last week’s G-20 meeting, the group officially anointed itself as being in charge of global economic affairs.

Plus, we now have the G-7 refusing to discuss the dollar, which is highly unusual. Many will say that, if the G-7 does indeed refuse to comment on the dollar at this weekend’s meeting, it’s merely a sign they’re beginning to turn the reigns over to the G-20 for currency matters.

Baloney! The G-7 WILL discuss the huge “global economic imbalances” in the world. And to me, that’s code talk for a currency devaluation on the agenda. Members of the G-7 ARE discussing it. They’re just NOT doing it in public.

It reminds me of the 1985 Plaza Accord, where James Baker committed the U.S. to a depreciating dollar, bulldozing over our creditors, and ultimately precipitating the ‘87 crash.

The difference: Back then the U.S. was in a position to lead the devaluation. Today, it’s not. Today, our creditors are going to bulldoze over us.