Five for the Weekend #61

Lots said this week about the US dollar and gold. This is a good time to remember that nations don't have allies, they have interests. It is in the interest of nations holding massive amounts of US dollar assets to NOT see those assets significantly decrease in value. It is in the interest of the US government to see a dollar devaluation, to lighten the massive debt burden.

And the American people? Well, when it comes to this particular subject at least, the US government does not have the best interests of the average American man and woman at heart. This is especially true of lower-income working people, whose dollars are precious. And who may well see those dollars decrease substantially in value over time.

Note the US government doesn't want hyper-inflation. But it DOES want inflation. That is the tightrope being walked. Every US administration professes to want a "strong" dollar. That's bunk -- or at least it was bunk under the previous administration and under the current one as well.

And with that, here are five items for your review over the next couple of days.

• Some of my lefty friends can't stand The Wall Street Journal editorial page. And my fellow libertarians dislike its fondness for foreign military entanglements. Nonetheless, the paper's editorial on the US dollar is spot on.

• Speaking of the Journal, David Malpass penned an op-ed about about the US dollar and gold well worth our consideration: "A better approach would start with President Barack Obama rejecting the Bush administration's weak-dollar policy. This would invite capital and jobs to come back before interest rates have to rise." No argument here.

• Staying with gold, Peter Brimelow of MarketWatch writes of the Aden Sisters, who publish a newsletter based out of Costa Rica. They are very much bullish on the yellow metal.

• Neill Ferguson argues convincingly in the Telegraph that "there's no such thing as too big to fail." During the crisis it was often said that officials at the Federal Reserve and Treasury would do "whatever it takes" to avoid a Great Depression. Now they must do whatever it takes to address one of the key causes of the financial crisis: the existence of financial institutions that consider themselves too big to fail – but which are run in such a way that they are bound to do so.

• Africa Confidential writes about "mines, dollars and dams" in Congo. Commodities will only grow in importance globally. Making Africa in general and countries like Congo of increasing interest for people across the globe. Stay tuned to this story.

Have a great weekend.

Comments

[David]

Good list, will certainly check out the Ferguson piece. He's been making the point (in recent interviews) that the "too big to fail" banks have now become even more TBTF with subsequent bailouts and govt. rescues.

[John]

@David: You know, I actually have watched Kudlow's CNBC show a bunch of times recently. This week he had Ferguson on, with Ferguson saying the USD would lose 20% to 30% of its value. He was only on for one segment(!). Wish he'd been on longer.

[David]

PS, if you want to see more w/ Ferguson, here's a link to a fairly recent Bloomberg interview:

http://financetrends.blogspot.com/2009/09/banks-are-bigger-problem-now-ferguson.html

I've also noticed some lengthy sit down interviews with Niall on YouTube, so there might be something of interest there as well!

[Secured Loans]

So, so, so true: "This is a good time to remember that nations don't have allies, they have interests"

[John]

@David: Thanks -- I hadn't thought of YouTube. Great idea.

SC: Something we need to constantly remind ourselves.