U.S. Dollar Losing Global Favor

World Bank president Robert Zoellick said recently that the U.S. can no longer assume its position as the economic superpower will remain unchallenged, and that the days of the U.S. dollar being the preferred global currency are coming to an end.

Zoellick also stated that it would be a mistake to think that the dollar be the major reserve currency in the world as well. Other currencies expected to gain more favor and global acceptance are the Chinese renminbi and the euro.

In other words in the mid-term future there will be more options as the U.S. dollar continues to be battered under the misguided policies of the Obama administration and the Federal Reserve printing press.

In remarks considered unusual for a World Bank president, Zoeller also criticized the Obama administration for attempts to make the Federal Reserve even more powerful, while saying the Treasury Department should be vested with more power because of the oversight Congress now has over it, which at this time the Federal Reserve doesn't have.

Ron Paul on How to Solve Monetary Problem

Says fiat-dollar system is over: it has failed

Some of the issues talked about:

Need to get to bottom of problem, not offer bandaids

Central bankers can do what they want - no checks-and-balances since 1971

New international reserve currency being discussed

Central bankers selling gold to make it look like U.S. dollar is stronger than it really is.

Yearly deficit should be a major concern

Commodity standard would balance system - restrain problem

Central banking is problem

Need new monetary system

Sound Money is the Answer

U.S. Stock Surge Strengthens Dollar

Currency investors have temporarily taken their eyes off the fundamentals and are helping strengthen the U.S. dollar in response to government response to the credit crisis, as well as the upward moves of the stock market.

While it made no logical sense for the stock market to surge after the troubling news Thursday that mid-Atlantic factory output dropped to its lowest level in 18 years, still it did, and not only that, but the production in the industrial sector in the U.S. also fell to its lowest monthly drop since 1974.

For the most part the reason this is happening is the focus on governments around the world pouring capital into shoring up the credit crisis. This gives the illusion of safety, and for now people are buying into that illusion.

Once the focus comes back to fundamentals, we'll see the dollar soften again, as most of the banks see in the near term.

People have forgotten the real risks involved with the U.S. dollar, and are seeing it as a safe haven. That shouldn't last too long as reality sets back in. Another factor is they still assume the U.S. is the safest bet in times like these.

U.S. Treasuries and other liguid dollar instruments have been the main benefactors over the last few months.

Even the yen has fallen against the dollar in these times, dropping to its lowest level in 7 months.




Still, confidence in general is still low, and regardless of the government bailouts, credit is still hard to come by.

U.S. Federal Reserve Cuts Prime Rate by Half a Point

The U.S. Federal Reserve cut its lending rates by half a point today, joining other central banks around the world in an effort to boost failing markets.

Lending rates now stand at 1.5 percent from the Fed, with the discount rate also being trimmed by half a point to 1.75 percent.

Other banks cutting rates were the European Central Bank, which dropped it rates from 3.75 percent from 4.25 percent. The Bank of England trimmed their rates from 5 percent to 4.5 percent. Other central banks cutting rates were the Swiss National Bank, The Bank of Canada and the Swedish Riksbank.

This is more symbolic and psychological than really doing anything that will make a practical difference at this time.

U.S. Federal Reserve Cuts Prime Rate by Half a Point

The U.S. Federal Reserve cut its lending rates by half a point today, joining other central banks around the world in an effort to boost failing markets.

Lending rates now stand at 1.5 percent from the Fed, with the discount rate also being trimmed by half a point to 1.75 percent.

Other banks cutting rates were the European Central Bank, which dropped it rates from 3.75 percent from 4.25 percent. The Bank of England trimmed their rates from 5 percent to 4.5 percent. Other central banks cutting rates were the Swiss National Bank, The Bank of Canada and the Swedish Riksbank.

This is more symbolic and psychological than really doing anything that will make a practical difference at this time.