Asian central banks bought a lot of Dollars on the currency markets today. The intervention was seen by traders as only being intended to slow the decline of the Dollar and not any line in the sand aimed at stopping its collapse. Basically they are putting more of their own currencies into circulation but they are not going to risk devaluing themselves too far as the Dollar sinks into the morass.
There are so many trillions of Dollars floating around that no single foreign central bank can even consider more than Band-Aid measures. There have been rumors of banks buying Dollars for months but with the Dollar’s slide picking up speed, some banks are being more open about it and hoping to build confidence. (the life boats are very nice and we have plenty of ice) Countries that depend on exports for survival are leading the charge to buy Dollars. Hong Kong who keeps its currency pegged to the USD reportedly bought 5 billion overnight.
Other countries that have NOT been favoring the Dollar are also participating, that’s how bad it is. The Russians who have been converting Dollars to Euros for some time have purchased 1.5 billion Dollars yesterday and on top of 4 billion Dollars in the past week.
China that has upwards of 2.5 trillion in currency reserves with perhaps a trillion or more in dollars has indicated its displeasure with moves by the Federal Reserve that they see as driving the Dollar down. Some Republicans are claiming that Obama is doing this as a secret jobs program as a weaker Dollar in theory improves the sales of exports. Doing this would be extremely dangerous because the Republicans have so wrecked the US economy. Any wild swings in the value of the Dollar would only make things worse and threaten to collapse the Dollar entirely. The Chinese, being no fools have acquired a hundred tons of gold, other Asian countries have bolstered their own gold reserves as well.
After the Revolutionary War in America the shortage of money led to domestic trade being valued in jugs of whiskey. It worked so well that George Washington had to raise an army to end the practice. I’ll give you a can of beans for a haircut, 10 cans for a pod cast subscription.