Dollar bubble update

The BBC published a useful article on China’s dollar holdings. China actually cut its U.$. debt holdings 3% in June, a record in recent years. In 2008, it was China that rescued the United $tates, by increasing holdings of U.$. debt by 52%.

Japan and England have picked up slack for the United $tates this year, while China’s holdings of U.$. debt have grown only 7% so far this year total.(1)

Amerikan debt-holders should continue to push the United $tates in a diplomacy-first direction. There is still much potential in cutting military and wasteful homeland security spending. There are many in key places who agree.

Amerikkkan media bloviators are used to pummeling Iran, Korea and Arabs generally. They must learn to get past their old conflicts to cut back on their parasitism.

Bloomberg reports that “Russian President Dmitry Medvedev last month illustrated his call for a supranational currency by producing a sample coin after a summit of the Group of Eight nations.”(2) President Medvedev also said today that he is working on Mideast peace with I$raeli president Peres.(3)

On a technical note for the dollar, Japan, Germany and France returned to economic growth in the second quarter of 2009.(4) Although the U.S. Federal Reserve put out feelers for increasing the interest rate soon, it appears that other countries will be able to raise interest rates sooner than the United $tates if the surprise growth of France and Germany turns out to be true. Higher relative interest rates boost currency values.

The case for a new currency remains strong. When China, India and the oil producers agree, there can be a new reality.

Notes:
1. http://news.bbc.co.uk/2/hi/business/8207174.stm
2. Garfield Reynolds and Wes Goodman, “Pimco Says Dollar to Weaken as Reserve Status Erodes,” http://www.bloomberg.com/apps/news?pid=20601087&sid=aLW8jvysIe5k
3. http://www.google.com/hostednews/afp/article/ALeqM5hYRIpxIok0qqfYv6WKzsLU82lEBw
4. http://carnegieendowment.org/publications/index.cfm?fa=view&id=23617

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