Comments on: Interesting article on the US$ reserve status http://enlightened-american.com/2008/02/15/interesting-article-on-the-us-reserve-status One person's quest to make sense of a senseless American economy and society. Sun, 08 Jan 2012 12:07:34 +0000 hourly 1 http://wordpress.org/?v=3.0 By: Davy Bui http://enlightened-american.com/2008/02/15/interesting-article-on-the-us-reserve-status/comment-page-1#comment-6 Davy Bui Mon, 18 Feb 2008 18:32:00 +0000 http://enlightened-american.com/blog/?p=99#comment-6 As always, identifying the larger trend and profiting from it are 2 different matters. It's fairly clear that the US$ must decline. The key question I find myself asking is, what will that mean for the average American (i.e. those without offshore accounts) and our way of life? When this converges into other disturbing trends such as energy scarcity, and now agricultural scarcity, what will be the fall-out?<br/><br/>I agree with you that a knee-jerk move into the euro or pound may not be the wisest option. I generally don't trade in currencies but did try (unsucessfully) to convince my fiancee to move our rainy-day savings fund into Canadian $ or a high-yielder early last year.<br/><br/>Precious metals and commoditties seem a safe bet here. I've also considered the yen but more as a hedge to equity market exposure than a play on currencies. As always, identifying the larger trend and profiting from it are 2 different matters. It’s fairly clear that the US$ must decline. The key question I find myself asking is, what will that mean for the average American (i.e. those without offshore accounts) and our way of life? When this converges into other disturbing trends such as energy scarcity, and now agricultural scarcity, what will be the fall-out?

I agree with you that a knee-jerk move into the euro or pound may not be the wisest option. I generally don’t trade in currencies but did try (unsucessfully) to convince my fiancee to move our rainy-day savings fund into Canadian $ or a high-yielder early last year.

Precious metals and commoditties seem a safe bet here. I’ve also considered the yen but more as a hedge to equity market exposure than a play on currencies.

]]> By: Cash212 http://enlightened-american.com/2008/02/15/interesting-article-on-the-us-reserve-status/comment-page-1#comment-5 Cash212 Mon, 18 Feb 2008 14:20:00 +0000 http://enlightened-american.com/blog/?p=99#comment-5 For the last 30+ years the world has been overly dependent on the US$ as a reserve currency causing the $ to be overvalued relative to world currencies. I believe this is a natural and welcome correction that is healthy for the world economy and the decline will continue, especially relative to Asian/Emerging Mkt currencies backed by strong economies with manageable budgets running CA surplus. The decline should be manageable as the US capital markets are still the most liquid in the world and, barring a complete economic/financial collapse, will remain an attractive destination for large FX reserves. I do not believe, however, that the US$ is poised for a decline versus the Euro or GBP as I don't see what makes these economies any more attractive than the US economy and I believe the interest rate differential will decline in the near future. For the last 30+ years the world has been overly dependent on the US$ as a reserve currency causing the $ to be overvalued relative to world currencies. I believe this is a natural and welcome correction that is healthy for the world economy and the decline will continue, especially relative to Asian/Emerging Mkt currencies backed by strong economies with manageable budgets running CA surplus. The decline should be manageable as the US capital markets are still the most liquid in the world and, barring a complete economic/financial collapse, will remain an attractive destination for large FX reserves. I do not believe, however, that the US$ is poised for a decline versus the Euro or GBP as I don’t see what makes these economies any more attractive than the US economy and I believe the interest rate differential will decline in the near future.

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