Tag: US Dollar Posts

We live in interesting times. The United States is only a few weeks away from what potentially could be one of the largest defaults in world history. Given how the Republicans do not want to increase taxes and that the Democrats do not want to decrease spending, the only machinery that can prevent this default is currently seized up. Obama was so upset the other day during negotiations that he just up and left. Moodys once again threatened to lower the outlook on US treasuries. Given that the US is on the verge of a default, they are a little late to the game, but even so it’s also a rather historic negative outlook on the United States. Interest rates are near an all time low, which means any movement in the upward direction will hurt bond prices. That means that other than short term bonds, most bonds are extremely […]

I’m really surprised I didn’t read more about this today, but I imagine in the coming days more people will have something to say about it. China and Russia announced today that they would only be trading in their respective local currencies for trade between their own countries and abandoning trade settlement with the US dollar. This is big news. Ever since the abandonment of the gold standard, all international trades have historically been settled using the US dollar. This coveted position is known as the US Dollar’s Reserve Currency status, and it effectively gives protections for the United States that other countries don’t have. For example, even though the United States has continuously debased its currency by printing money (expressed in terms of gold, the US dollar has lost about 98% of its value since the Federal Reserve came into existence), the US dollar is still in demand since […]