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Forum Post: Currency Wars Update: /// QE3 is on… (But they’ll call it, “Nominal GDP Targeting”) /// World's Second And Third Largest Economies To Bypass Dollar ///

Posted 12 years ago on Dec. 28, 2011, 8:17 p.m. EST by MonetizingDiscontent (1257)
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QE3 is on… (But they’ll call it, “Nominal GDP Targeting”)

Posted on -December 29, 2011- by maxkeiser

Is Today’s Market Pricing A Forthcoming Reactionary-QE By The Fed? http://maxkeiser.com/2011/12/29/cue-jamesgrickards-qe3-is-on/

Is the market starting to comprehend that the non-QE of the ECB’s LTRO and SMP is in fact QE and implies the currency wars just went to 11 – forcing the Fed’s hand?

Is Today's Market Pricing A Forthcoming Reactionary-QE By The Fed?



Our earlier discussion... http://www.zerohedge.com/news/next-steps-euro ...of the relationship between ECB and Fed balance sheets as the driver of risk correlations this year seems particularly timely as we are seeing quite notable divergences among US asset classes and FX flows today. EUR is now up relative to the USD on the day (DXY is down and tracking stocks higher), Treasury yields are falling fast and the curve flattening (2s10s30s dropping rapidly) and Silver is rallying hard off its lows (Gold perhaps being held back for now by collateral/cash/redemption calls for now). Oil is back green for the week also.

Is the market starting to comprehend that the non-QE of the ECB's LTRO and SMP is in fact QE and implies the currency wars just went to 11 - forcing the Fed's hand?

::::::::::::::::Dollar (inverted) vs S&P 500 vs 10Y Yields::::::::::::::::


:::::Commodities are starting to surge again. Even Gold is now on the move too:::::


(((View this article Here))) http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2011/12/20111229_comms3.png

Currency Wars Update



Yesterday, the fine folks of Tradition Analytics were kind enough... http://www.zerohedge.com/news/tradition-analytics-asks-64k-question-has-fed-run-out-options-grow-credit-money ...to explain (once again) just how it is that the Fed has boxed itself into a corner, where in order to maintain the already outlierish growth rate of monetary supply, the Fed will have no choice but to print (same with the ECB), or else risk a massive economic collapse (thank you Austrian theory: http://www.zerohedge.com/news/austrian-view-approach-equity-prices ). Today, the same group provides an update on what everyone knows has been the status quo's only way of dealing with the deleveraging tsunami since March 18, 2009: currency warfare. In the note below, they provide a recap of the recent history of FX warfare, as well as an update of where we stand currently. Keep in mind, currency warfare only works to a point. Then it escalates into other, more violent forms, first trade wars, then real ones....

(((Continue Reading Here))) http://www.zerohedge.com/news/currency-wars-update

World's Second And Third Largest Economies To Bypass Dollar, Engage In Direct Currency Trade



To all who still think that in the war of attrition between the USD and the EUR (because contrary to what some have "discovered" only recently, currency wars have been going on for a long, long time and will continue to do so, before morphing into trade and real wars), in which both currencies are doomed, and where the winner takes it all, if only for a few minutes, we bring to your attention the following most recent update out of the Pacific Rim (where incidentally the Shanghai Composite has resumed its relentless track lower with the obvious intention of closing 2011 at its 52 week low) in which we find i) that the dollar's hegemonic control over the world is ending, and ii) that the mercantilist relationship so long sustained between China and the US, may be shifting and reversing, and in its next metamorphosis will see Japan buying the bonds of... China (although probably not for long - see next post).

As Bloomberg reports... http://www.bloomberg.com/news/2011-12-25/china-japan-to-promote-direct-trading-of-currencies-to-cut-company-costs.html ..."Japan and China will promote direct trading of yen and yuan without using dollars and will encourage the development of a market for the exchange, to cut costs for companies, the Japanese government said. Japan will also apply to buy Chinese bonds next year, the Japanese government said in a statement after a meeting between Prime Minister Yoshihiko Noda and Chinese Premier Wen Jiabao in Beijing yesterday." And before someone blows it off as merely more foreign relations posturing, "“Given the huge size of the trade volume between the Asia’s two biggest economies, this agreement is much more significant than any other pacts China has signed with other nations,” said Ren Xianfang, a Beijing-based economist with IHS Global Insight Ltd." As for China's reverse mercantilist move, one which will stun anyone who believes that Yuan is still undervalued, "Finance Minister Jun Azumi said Dec. 20 buying of Chinese bonds would be beneficial for Japan because it would help reveal more information about financial markets in China, the world’s largest holder of foreign currency reserves." Speaking of, has Albert Edwards gloated yet that given enough time, he always ends up being proven right, in this case about the CNY's upcoming devaluation?

(((Continue Reading this article Here))) http://www.zerohedge.com/news/worlds-second-and-third-largest-economies-bypass-dollar-engage-direct-currency-trade

Presenting The Winners And Losers In The Ongoing Currency Wars

(((View Charts Here))) http://www.zerohedge.com/news/presenting-winners-and-losers-ongoing-currency-wars
"...Simply put, you can't grow fast enough, you can't cut rates, that leaves only one option (call it what you want), currency devaluation."



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