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Will the Dollar Rebound Before Being Dissolved Into Global Currency?

Recently by Eric Blair: Banksters Inflate Speculative Food Bubble, U.N. Offers Global GovernanceSolution

Every time the dollar begins to decline, I wonder, "Is this it, is this the end to the fiat dollar?" The fundamentals suggest that it should be finished, but just as the world is about to declare it dead, miraculously a global storyline seems to emerge just when needed and foreign investors rush back in for "safety." A clear example was the steady drumbeat of a sovereign-foreign-debt war that resulted in reports of whether the Euro would even survive, while the dollar enjoyed a triumphant ride up victory mountain.

Since the "world" declared the Euro debt crisis saved, the focus has shifted to exposing America’s deficit problems, which has led to the dollar collapsing to its 5-month low against the Euro. There seems to be a growing realization by foreign countries that a volatile dollar as the world’s reserve currency is unhealthy for their nations and the global economy as a whole – especially as it pertains to vital commodities like oil and food. This increased awareness is causing foreign governments to invest more in other currencies, gold, and even vast stretches of agricultural land – while beginning to advocate for a more stable global reserve currency.

Some are defining this volatility as all out "international currency wars." The Telegraph reported on Brazil’s fears of a currency war:

Brazil’s finance minister Guido Mantega has complained repeatedly over the past month that his country is facing a ‘currency war’ as funds flood the local bond market to take advantage of yields of 11pc, vastly higher than anything on offer in the West.

‘We’re in the midst of an international currency war. This threatens us because it takes away our competitiveness. Advanced countries are seeking to devalue their currencies,’ he said, pointing the finger at America, Europe and Japan. He is mulling moves to tax short-term debt investments.

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October 1, 2010