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Posts Tagged ‘qe2’

We are entering very dangerous waters.  The backlash will be severe, we are already seeing the effects…

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QE2 risks currency wars and the end of dollar hegemony

As the US Federal Reserve meets today to decide whether its next blast of quantitative easing should be $1 trillion or a more cautious $500bn, it does so knowing that China and the emerging world view the policy as an attempt to drive down the dollar.

By Ambrose Evans-Pritchard, International Business Editor
Published: 9:56PM GMT 01 Nov 2010

QE2 risks currency wars and the end of dollar hegemony 

QE2 risks currency wars and the end of dollar hegemony Photo: AFP

The Fed’s “QE2” risks accelerating the demise of the dollar-based currency system, perhaps leading to an unstable tripod with the euro and yuan, or a hybrid gold standard, or a multi-metal “bancor” along lines proposed by John Maynard Keynes in the 1940s.

China’s commerce ministry fired an irate broadside against Washington on Monday. “The continued and drastic US dollar depreciation recently has led countries including Japan, South Korea, and Thailand to intervene in the currency market, intensifying a ‘currency war’. In the mid-term, the US dollar will continue to weaken and gaming between major currencies will escalate,” it said.

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