Inquiring mind are wanting to say a huge “thank you” to President Obama, Tim Geithner, and Ben Bernanke for making everything an American own worth less…much less…especially the money in their wallets and bank accounts!
According to JP Morgan & Chase Co., the dollar may fall below 75 yen next year becoming the world’s “weakest currency” due to the Federal Reserve’s monetary-easing program:
“The U.S. has the world’s largest current-account deficit but keeps interest rates at virtually zero,” Sasaki said at a forum in Tokyo yesterday. “The dollar can’t avoid the status as the weakest currency.”
The Fed said on Nov. 3 it will buy $75 billion of Treasuries a month through June to cap borrowing costs. The central bank has kept its benchmark rate in a range of zero to 0.25 percent since December 2008. The Bank of Japan on Oct. 5 cut its key rate to a range of zero to 0.1 percent and set up a 5 trillion yen ($59.9 billion) asset-purchase fund.
The dollar traded at 83.38 yen as of 12:04 p.m. in Tokyo after falling to a 15-year low of 80.22 on Nov. 1. The greenback declined to post-World War II low of 79.75 yen in April 1995. The U.S. currency has declined against 12 of its 16 most-traded counterparts this year, according to data compiled by Bloomberg.
Oil, food, travel just got…and will continue to get much more expensive. The elderly and anyone else on a fixed income will really feel the pinch. In fact, against the Yen:
Ten-year Treasury yields may decline to around 2.25 percent over the next year, and their premium over similar-maturity Japanese yields won’t widen, he said. The benchmark 10-year Treasury yielded 2.89 percent today.
The world economy is likely to expand 3 percent next year amid the extra liquidity provided by central banks, “repeating a pattern from early 2002 to the end of 2004” when improving risk appetite boosted stocks and commodities and the dollar fell 25 percent against the yen, Sasaki said.
Another big “thanks” to the Dynamic Duo of Tim Geithner and Ben Bernanke!
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