currency reserves

The Precipitous Decline in the U$D

Last years sudden surge in demand for the U$D as the debt bubble burst allowed an artificial jump in the U$D index. That .... is over.

The U$D is now sounding its death nell as our trading partners are seeking ways to minimize their exposure to our exported inflation.

You may have heard about the recent China/Brazil trade agreement.

Chinese President Hu Jintao and Brazilian President Lula da Silva witnessed the signing of 13 agreements in Beijing.

The highlight was a $10 billion loan from China Development Bank to Brazil's state-owned Petrobras oil company. In return, Petrobras is to supply China's state-owned Sinopec with up to 200,000 barrels of oil a day for the next 10 years.

[..}China last month overtook the United States to become Brazil's number one trading partner, with two-way trade in April reaching $3.2 billion.

China Helped to Create Conditions for Global Financial Meltdown - Moritz Schularick

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According to Moritz Schularick:

Emerging markets, most notably China, helped to create the macroeconomic backdrop for the current financial crisis by subsidising interest rates and consumption in the US.

Even worse, the reason they did so was in reaction to contagion, a very nasty by-product of globalization as well to avert the 1997 Asian financial crisis.