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Oil, Gold and the US $


mangrove

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Geez I wish you and flower would either take it out back or get a room. :weirdsmiley: Imo you're killing so many conversations with your constant bickering and one-upmanship.

 

Thanks for the article Damon. I saw that the US gold price had shot up at about midday NY time last night and I hadn't seen any other explanation for it until now.

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Every so often I come across an opinion piece that hits like fuifui moimoi. Here is a link to one such piece, more so the CNBC clip than the surrounding article.

 

http://europe.theoildrum.com/node/5847#more

 

However the video chap's whole argument is based on what is probably a tenuous interpretation of one of the Fed Reserve governors saying that the Fed will now take into account asset prices when formulating interest rate policy. I would have thought that the more obvious interpretation would be that the Fed governor was putting a shot across the bows of the stock market, rather than delivering a message to the g20. Nevertheless, as the article writer says, the video chap delivers one hell of a lucid story imo.

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I think the "standout" point is the stress that they want to keep the independence of their currency, just in case they have to go to war and they need to print more money - this point is worth noting since he has also coined another person's view that the nation that provides the reserve currency would be running into deficit and would eventually go bankrupt - a big BS. I would rather stress that the reason why the USA goes into such huge deficit (thereby weakening their own currency) is because of their "liking of war". Using war as a means to solve their economic and financial problem at home. It's the many wars they had in the last 50 years that is the major cause in debasing their own currency, the US$.

 

If the past various US presidents have been running their country effectively and responsibly (like with a balanced budget), I doubt if the US$ could/would be so easily debased. But as usual, they don't like to look at themselves in the mirror but instead prefer pointing finger at others.

 

Another point worth knowing is G20 and IMF - just keep this in mind, all the members in these two groups are only interested in using these two bodies to serve their own national interests, hence don't expect much coming from them. An on going sore point for the emerging nation member in IMF is the unfair and unequal distribution of voting power. The EU members and the USA are holding voting power that has nothing to do with their contribution to the IMF treasury - until that is resolved, nothing solid will come out from this organisation.

 

And as long as this impasse drags on, the more polarised the global monetary system will become, on one side it's the USA providing most of the reserve currency, and on the other side, the Chinese providing most of the credits and sucking up most of the reserve currency... eventually this will drive both countries either to confrontation or merge into a super super power with EU and the rest of the world being kicked around. This is one scenario the EU and the ECB will live to regret if they are still steadfastly refusing to share their power in IMF.

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