Money Manager Mirhaydari: 'We're on Cusp of Currency War'
Friday, 25 Apr 2014 07:06 AM
Indeed, "we're on the cusp of an outright currency war, . . . as central banks in all the major economies actively work to weaken their currencies to boost exports, their economies and keep pushing inflation higher," he writes in an article for MarketWatch.
It amounts to "a race to the bottom," Mirhaydari declares.
The new element of the equation is that both China and Europe are pushing their currencies lower to spur economic growth, he notes.
The European Central Bank has begun to talk about purchasing bonds, which roiled the U.S. stock market earlier this month, Mirhaydari states.
In the United States, "new Federal Reserve chairman Janet Yellen seems ready and willing to keep the dollar down by holding short-term [interest] rates lower for longer until both inflation returns to the Fed's 2 percent target and alternative measures of labor-market health, such as wages, recover," he argues.
"That will keep the pressure on the dollar."
The currency war could make things ugly for stocks, Mirhaydari insists.
"The takeaway: A market that's grown complacent because of the steady drop in the yen is about to be rattled as Europe, China and others join Japan in actively weakening their currency. It's not going to be pretty."
Meanwhile, massive central bank easing will doom the dollar, says James Rickards, author and managing director at Tangent Capital Partners.
He tells Bloomberg central banks are on a money-printing campaign to avoid deflation. "If you print enough money, you will collapse confidence in the dollar. The ultimate backing of the dollar is confidence."
Related Stories:
© 2014 Moneynews. All rights reserve
No comments:
Post a Comment
Thanks for commenting. Your comments are needed for helping to improve the discussion.