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Secret Meetings Tanking the Dollar?
By Mike Conlon | October 6, 2009
There was an article published in the UK Independent by a fairly credible journalist claiming that there were “secret meetings” taking place between Arab Nations and the BRIC countries to end the US dollar’s reign as the world’s reserve currency by agreeing to trade oil in anything but the dollar.
As a result of this speculation, the US dollar is down and gold is up pretty big today (+2.53%). The talk is that they are looking to establish a basket of world currencies plus gold as payment for oil. While foreign dis-satisfaction with the devaluation of the US dollar is nothing new, should these nations pull this off it could have serious repercussions for the US dollar.
Now I don’t want to speculate what would happen if this were to be true, but this appears at least on the surface to really put pressure on Helicopter Ben and the Fed to do something about the falling dollar. But at this point it doesn’t look like that’s going to happen.
Until global account balances come back into more of a balance, expect this to be nothing more than rhetoric as foreign nations like China and Japan (who have major dollar reserves) have way too much to lose should the US dollar decline further due to losing its reserve status.
In the end, something has to give. This global game of chicken will not end well if we stay on the same course. The question is, who is going to swerve first???
Regardless of what happens, it is now more than ever so important that you have an understanding of what goes on in world politics and currency markets. To learn about it, click here.
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