In the latest catastrophic economic news (most of this is not even being touched by the mainstream media in the U.S.), Brazil and Argentina is now abandoning the US dollar as the preferred trading currency From Presstv.ir.
Brazil and Argentina have launched a new payment system in their bilateral trade, doing away with the US dollar as a medium of exchange.
With OPEC nations possibly following suit, this could be the death knell for the burgeoning U.S. currency. From the Telegraph:
The Saudi central bank said today that it would take “appropriate measures” to halt huge capital inflows into the country, but analysts say this policy is unsustainable and will inevitably lead to the collapse of the dollar peg.
As a close ally of the US, Riyadh has so far tried to stick to the peg, but the link is now destabilising its own economy.
The Fed’s dramatic half point cut to 4.75pc yesterday has already caused a plunge in the world dollar index to a fifteen year low, touching with weakest level ever against the mighty euro at just under $1.40.
There is now a growing danger that global investors will start to shun the US bond markets. The latest US government data on foreign holdings released this week show a collapse in purchases of US bonds from $97bn to just $19bn in July, with outright net sales of US Treasuries.
The danger is that this could now accelerate as the yield gap between the United States and the rest of the world narrows rapidly, leaving America starved of foreign capital flows needed to cover its current account deficit – expected to reach $850bn this year, or 6.5pc of GDP.
This could be crack that breaks the dam wide open and plunges the dollar to almost worthless levels. Lets hope that things improve soon. I don’t look forward to the idea of hauling a wheelbarrow of cash to the grocery store to buy a loaf of bread…
Tags: Argentina, Brazil, OPEC, preferred currency, US dollar
