Dollar Tumbles, Debt Inflates, International Community Calls For Alternative

0 Shares

Government dysfunction has pushed the value of the U.S. dollar near its lowest point of the year against the euro. Meanwhile, the price of U.S. Treasury debt has skyrocketed to its highest point since January.

The Wall Street Journal noted on Friday:

Yields on the 10-year Treasury note, which move inversely to prices, touched 2.538%, the lowest level since July 24, according to CQG. The dollar continued its slide against major rivals, including the euro, the yen and the pound. The euro recently bought $1.3686 from $1.3676 late Thursday, while the pound fetched $1.6186 from $1.6165. The greenback traded at ¥97.71 from ¥97.93.

As a result of the government shutdown’s effect on dollar value and debt prices, the Federal Reserve’s easy money policy is expected to continue beyond December, when the Fed was initially expected to begin the process of tapering government stimulus efforts. Instead, the central bank is likely to continue pumping until March 2014.

As the dollar continues to slip, policymakers and investors in China and Japan have reportedly begun making plans to distance themselves from the dollar to ensure that Washington’s dysfunction doesn’t impair their own economic viability.

“We’re glad a deal has been struck,” said a Japanese policymaker Reuters. “But the uncertainty will remain and it will be the same thing all over again early next year.”

Last week, China made headlines when officials in the nation urged the international community to replace the dollar as the international reserve currency.

“As U.S. politicians of both political parties are still shuffling back and forth between the White House and the Capitol Hill without striking a viable deal to bring normality to the body politic they brag about, it is perhaps a good time for the befuddled world to start considering building a de-Americanized world,” China’s official state-run news agency, Xinhua, said in an English-language commentary before the U.S. Congress came to a temporary budget agreement.

Since 2009, China has been calling for a world reserve currency replacement for the dollar. It has also been taking steps to make the yuan, its own currency, a viable alternative.

China holds more than $1.3 trillion U.S. Treasury debt.

Personal Liberty

Sam Rolley

Sam Rolley began a career in journalism working for a small town newspaper while seeking a B.A. in English. After covering community news and politics, Rolley took a position at Personal Liberty Media Group where could better hone his focus on his true passions: national politics and liberty issues. In his daily columns and reports, Rolley works to help readers understand which lies are perpetuated by the mainstream media and to stay on top of issues ignored by more conventional media outlets.

Join the Discussion

Comment Policy: We encourage an open discussion with a wide range of viewpoints, even extreme ones, but we will not tolerate racism, profanity or slanderous comments toward the author(s) or comment participants. Make your case passionately, but civilly. Please don't stoop to name calling. We use filters for spam protection. If your comment does not appear, it is likely because it violates the above policy or contains links or language typical of spam. We reserve the right to remove comments at our discretion.

  • Motov

    “Since 2009, China has been calling for a world reserve currency replacement for the dollar. It has also been taking steps to make the yuan, its own currency, a viable alternative.”

    When this happens, we will be in very deep doo-doo,..
    Impeach Obozo now before it is too late,… Audit the FEDS!!!!
    This is the train wreck that will destroy us.

  • scott miller

    Tick tick tick the clock is running on “free” health care, food stamps, social security and medicare.

    Or people can just say “oh it will never happen,” what they generally say when you talk about this.

  • Vigilant

    Methinks The Wall Street Journal suffers from CLS (Chicken Little Syndrome).

    The dollar has not “tumbled” from any height, and is on no “slide.”.

    Inspection of the historical currency exchange rates over the past five years at http://www.oanda.com/currency/historical-rates/ indicates that the dollar is holding its own and even advancing against the Yen. As for the Euro, the dollar is close to its midrange over that period of time, and has fluctuated far more radically against all currencies from 2009-2012.

    The buck has consistently lost against the Yuan since June of 2010 as China continues to buy up US Treasury issues and artificially manipulates the valuation of the Yuan. But the Yuan has gained against all the other major currencies as well.

    To be clear, there’s no doubt that the dollar will implode, perhaps as early as next year. But the markets discounted these most recent CR and debt ceiling issues in sure knowledge that the Congress would cave. The crunch will hit when the Fed reduces or discontinues its “quantitative easing,” at which point hyperinflation will kick in like nothing you’ve seen in your lifetime.

    So, no, predictions for the demise of the dollar are still somewhat premature.