BY: SEAN HYMAN
Are You Embarrassed By Our Government? Mad? Frustrated? Feel Victimized? Are You Looking For A Legitimate Way To Fight Back, Reclaim Your Freedom And Resurrect Your Portfolio To “Pre-Madoff” Days? – A Way To Escape The Plague Of Financial Disease Ravaging Your Mind, Body, And Bank Account?
The economy has not been kind to our wallets, health, or mental sanity. By government actions, bailouts of Wall Street, etc. – you’d think Americans had become evil-doers entangled in terrorist activities – treated unconsciously by our government, forced to endure one assault and air strike after another on our liberties, freedom, and portfolios. Early retirement, for most, only a figment of their imagination, like an oasis in the middle of the Sahara. Heck, we even take it to the chin when it comes to Swine Flu vaccinations, as the “fat cats” on Wall Street get the same number of doses as some public hospitals – reserved, for their private use, because of their “importance”.
Heed My WARNINGS: things are getting worse. America is becoming socialist. Over 100 years of history, everything our parents and grandparents stood for, that built America – gone, vanishing fast. And, burying your head in the sand like an ostrich, hoping, praying, ignorantly ignoring the situation certainly will not make things better. It’ll only delay the inevitable, worsening the plague of financial stress and further tighten the “government shackles” that bind you. If you’re not willing to explore radical “cures” now – then when?
FX University Daily: Friday, April 2, 2010
The Man's Gone Mad!
Sorry Geithner, But It's the Other Way Around Dude
By Ashish Advani
I fell off my chair laughing when I read this news article (if you can call it that). It was an interview that Treasury Secretary Timothy Geithner gave to John King on CNN. The pompous, financial genius was doing what he does best – blaming others for his mess. Seriously, this may be the most ridiculous statement I’ve read in a while. Geithner actually said…
“I think China will be better off; they're stronger as an independent country if they're not running an exchange rate policy that, essentially, has the Federal Reserve of the United States setting monetary policy in China."
Um, I hate to tell you this Geithner, but it’s the other way around. China is actually the one setting our monetary policy.
The So-Called “China Dependence”
I should backup and give you the history here. For a very long time, China fixed the value of its currency, the yuan to the U.S. dollar. A few years ago, the very wise Chinese made a significant change. They started pegging to a basket of currencies rather than just the U.S. dollar.
But here’s the kicker: They kept the composition of this basket a secret. So basically the Chinese can choose how much they will allow their currency to appreciate or depreciate at any given time.
In other words, they’re not dependent on us as Geithner mentioned.
Now, I do agree that the Chinese yuan is undervalued. And this is giving the Chinese exports an unfair edge. But that’s our problem, not theirs.
What I find absolutely hilarious is that Geithner actually believes that Chinese let the Americans run their Treasury policies when they peg the yuan to the dollar.
Here are the real facts that Geithner somehow overlooked:
The U.S. is running incredible deficits. Washington needs financing at a rate of nearly $130 billion per month. The U.S. funds their deficits by issuing Treasuries. In fact, we’re spitting out Treasuries at record rates. The biggest buyer of those much-needed U.S. Treasuries is China. In other words, we need China.
A Day without a Chinese Investor
The Feds are keeping interest rates at zero for a very long time. (That is a type of currency manipulation in itself, but I digress). And yet the Chinese still buy U.S. debt.
Let’s imagine, just for a moment, that the Chinese get fed up with the U.S. spending habits (or Geithner’s insults) and stopped buying our debt altogether. They have already started scaling back their Treasury purchases – especially on long-term 30-year bonds.
We have two choices here. Washington can stop spending and start cutting our debts (not likely). Or they can raise interest rates to attract more Treasury buyers.
So who is managing whose monetary policies? We are not the Treasury Secretary, and yet we figured that much out. Wonder when the lights will switch on in his noggin’?
The Chinese control and manage our monetary policy and unless we stop spending and stop these deficits, they have the remote control.
On April 15, the Treasury Department will release a list of nations they consider "currency manipulators," and many are wondering if China will be on the list, which could further strain relations.
My humble suggestion to the Treasury Secretary, “Stop biting the hand that feeds you!”
And my humble suggestion to you, dear reader? Don’t rely on clueless Secretary Geithner to dictate what your savings will be worth three, five, 10 years from now. Instead, start making a few long-term purchases in foreign currencies that can protect your overall wealth (especially Asian currencies that will rally when China finally lets the yuan appreciate).
Also, I always recommend keeping at least 10% of your long-term wealth in “hard currencies” like gold and silver. Metals tend to rise in price as the worst government shenanigans come to light.
Bottom line: Don’t get caught paying the bills for Geithner’s (and our other decision-makers) worst faux pas. Take action now.
Yours in FX Profits,
Ashish Advani, Co-Editor
P.S. The day of reckoning is near. The day is coming when no one will show up for our bond auctions to buy our debt. When that happens, gold, oil, and a few currencies will skyrocket.