The Dollar Plunges Further

[Vagos]

http://www.bloomberg.com/apps/news?p...refer=currency

http://biz.yahoo.com/ap/071107/wall_street.html?.v=52

Both links are top page on Drudge Report.

From the first link,
[ QUOTE ]
French President Nicolas Sarkozy told a joint session of the U.S. Congress the Bush administration must stem the dollar's plunge or risk triggering a trade war.

``The dollar cannot remain `someone else's problem,''' Sarkozy said today on Capitol Hill. ``If we are not careful, monetary disarray could morph into economic war. We would all be its victims.''

``Those who admire the nation that has built the world's greatest economy and has never ceased trying to persuade the world of the advantages of free trade expect her to be the first to promote fair exchange rates,'' Sarkozy said. He repeated his concern that the Chinese yuan is unfairly undervalued.

[/ QUOTE ]

From the second,

[ QUOTE ]
Meanwhile, the dollar swooned amid speculation that China will seek to diversify some of its foreign currency stockpiles beyond the greenback and General Motors Corp. further dampened sentiment by posting a record loss tied to an accounting adjustment.



[/ QUOTE ]

Meanwhile, it looks the price of gold continues to soar, at about $830/ounce right now, which I believe is as high as it's been in over 25 years.

How relevant is all of this? How big of an issue will it bein the coming months? Discuss.

EDIT: Oops, didn't see the other thread related to this titled "US Can Thank China..." Even so, the first article I linked is new stuff and has some pretty strong words from the French President. But if you want to lock or delete the thread, go ahead.

[AlexM]

You realize the actual price of gold isn't changing, right?

[ConstantineX]

It's convenient for Sarkozy to blame his anemic economy on outside forces rather than the French government take responsibility itself. France hates the weak dollar, (and conversely, the strong Euro) because the outlook of its people and government is essentially mercantilist and they believe they can drive their economy by maximizing exports. And actually because of such high rates of taxation domestic demand might be so weak that this is actually true (euro for euro investment in exportable goods boosts the economy more because the foreigners buying have so much higher disposable incomes to purchase).

[bookish]

[ QUOTE ]
It's convenient for Sarkozy to blame his anemic economy on outside forces rather than the French government take responsibility itself. France hates the weak dollar, (and conversely, the strong Euro) because blah-de-blah

[/ QUOTE ]

Sarkozy hates the weak dollar, because like me he's got a $$Neteller account and a £/€ bank account and each time he withdraws he gets less and less money.

Come on Yankees. Sort it out!

[bobman0330]

[ QUOTE ]
It's convenient for Sarkozy to blame his anemic economy on outside forces rather than the French government take responsibility itself. France hates the weak dollar, (and conversely, the strong Euro) because the outlook of its people and government is essentially mercantilist and they believe they can drive their economy by maximizing exports. And actually because of such high rates of taxation domestic demand might be so weak that this is actually true (euro for euro investment in exportable goods boosts the economy more because the foreigners buying have so much higher disposable incomes to purchase).

[/ QUOTE ]

There was a minor stink a month or two ago when Sarkozy tried to lean on the ECB to put some downward pressure on the euro to help French exports. He's probably just worried about Airbus.

[Borodog]

[ QUOTE ]
You realize the actual price of gold isn't changing, right?

[/ QUOTE ]

Yes it is:



People are increasing their demand for gold as an inflation hedge, which is driving up the price of gold independent of the fall in the dollar. You can see this because gold is appreciating against all currencies, not just the USD:

[AlexM]

Yeah, I looked into that some after I said that and realized I was wrong. It's still more about the dollar's price dropping than the gold price going up though.

[ QUOTE ]
You can see this because gold is appreciating against all currencies, not just the USD

[/ QUOTE ]

Aren't they all fiat currencies? I mean they're not inflating their currencies as much as we are, but it still happens.

[Borodog]

[ QUOTE ]
Yeah, I looked into that some after I said that and realized I was wrong. It's still more about the dollar's price dropping than the gold price going up though.

[ QUOTE ]
You can see this because gold is appreciating against all currencies, not just the USD

[/ QUOTE ]

Aren't they all fiat currencies? I mean they're not inflating their currencies as much as we are, but it still happens.

[/ QUOTE ]

Sure, but look at the very right hand side of the graph. Gold is up like 30% in 3 months in all currencies. That's not monetary price inflation; that's increased demand for gold. The same thing happened from mid 2005 to mid 2006, until a series of central bank gold dumps flattened the trend for a year.

You can see the long term inflation of the dollar and yen versus the Euro and Aussiebuck on the left half of the graph, by the way. That was when the fed was printing like mad to fund the war and paper over the recession. After that but before the latest round of rate cuts, the fed had slowed the monetary gas pedal and we were paying for the war with foreign debt (i.e. China was financing our wars; good times).

[iron81]

I just read that China recently unpegged the Yuan from the dollar. Did anyone hear anything about this?

[Borodog]

[ QUOTE ]
I just read that China recently unpegged the Yuan from the dollar. Did anyone hear anything about this?

[/ QUOTE ]

I heard that they were thinking of selling off $500B of their USD denominated reserves, but didn't hear that they unpegged. Source?