this is a very interesting development …
China on Thursday appeared to signal that it would allow its currency, the yuan, to rise against the dollar. The Chinese central bank said Thursday it would alter how it manages the yuan, which is currently pegged to the dollar. That change raised hopes among economists that China was preparing to allow its currency to rise in value, a change that would boost the competitiveness of American products in China.
Now we’ll have to balance this against the Obama administration’s announcement that it wants to cut Federal domestic spending. The wise thing to do would be to cut military spending(maybe scale back on the TWO WARS we’re now fighting), but I’m not one to accuse the Obama adminstration of being wise
These are the kind of things that could push the U.S. dollar around. China’s announcement could further erode support for the dollar; I believe the currency peg is part of what is supporting the buck. Of course, the Chinese may just be keeping up appearances and not really going to do anything. Likewise, the Obama administration is keeping up appearances about reining in spending. Maybe we’ll get a bounce in the dollar on the news from the White House, but the China news reinforces the longer-term trend, and that is bullish for gold.
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{ 2 comments… read them below or add one }
C’mon Sean….welfare and entitlement programs account for over half of all federal spending. If you want to cut domestic spending, and adhere to the Constitution at the same time, eliminate these things first. I guarantee you that when this country’s economy finally crashes, it will be these programs that are to blame, and any military spending will pale in comparison.
There are many ways to slice and dice how the government spends our money. Here’s one you may not be aware of. That interpretation isn’t perfect either, but something to think about. I am open to cutting welfare, let’s just start with cutting the wefare for Wall Street bankers and defense contractors. Oh, and the War on Drugs — I’d cut the spending for that, too.