"Asian centrals banks were so worried about the weak US dollar they intervened overnight to buy US dollars and sell their own currencies, given they are dependent on their currencies staying low to help their export sectors. Central banks in Korea, Thailand, Malaysia, Taiwan, Singapore and Hong Kong all intervened to weaken their own currencies,"

Hmmmm, what to do, what to do......

English Uncomfortable With New Zealand Dollar's Surge (Update2)

http://www.bloomberg.com/apps/news?pid=20601081&sid=aUs95SrDtqVg

While borrowing costs "will normalize at some stage," English said that by reining in spending, the government "can influence just how far and how fast those interest rates rise."

You see, proof, that a credit/money volume control IS KNOWN to restrain i.rates, and hence exchange rate would also reduce. (Where would the 'carry pressure be? C'mon, be honest.) Classic orthodoxy from Bill E - that of course doesn't impact on banks and their interests, to a major degree. So, suppose we set about "reining in government spending" (eg. sort WFF; major cuts in non-essentials, like NZTE etc; rein in local govt. spending) AND give RBNZ an effective credit/money volume control - which would impact banks - but mean we build and sustain a wider, deeper export mix and develop a stronger productve economy? Would this not also reduce the housing bubble dynamic, intrinsic to our economy, and make housing more affordable?

Who wouldn't want this?

Who wouldn't want these outcomes?

http://www.interest.co.nz/ratesblog/index.php/2009/07/16/opinion-why-the...

Time for NZ to adopt the gold standard for our currency while the NZD:USD is so high.

No body wants a weak Dollar, except the US, heck maybe even the US don't want a weak dollar. How else can you freeload on the rest of the world except by illusion of a strong currency ?? Financing their humongous deficit means the dollar don't get too weak otherwise interest rate will have to go higher...which will finally kill any semblance of their economy strength.

The rest of the world meantime is still fixated with an outdated model of "export for growth"...except they don't have many places to export to anymore. Therefore the rush to "slow" the Dollar decline againsts their own currency.

What is the final result of this policy ?? Gold goes up as investors finally give up on fiat currencies....But wait for the rebound soon....don't get caught by "irrational exuberance" in Gold.

Bernard,

David Malpass has an interesting opinion on devaluing a country's currency to prosperity.

http://online.wsj.com/article/SB1000142405274870329800457445892318694187...

Steven gave this excellent link yesterday.....the former CEO of RBS puts on a very eloquent show. His view on Gold Vs $US makes sense....

http://www.youtube.com/watch?v=CBi9iLspoRc&feature=player_embedded

i'm with you ,wally....which makes me feel kinda uncomfortable...buy into the factory that produces the stuff, not the end product!
i bought into newcrest at $A10.18 back in '04 and today they're around $A35 .
also some other OZ stocks i boughtin the same mode are up around 2-300% since purchase.

it's a bit late to buy in now as the horse is out of the stable but if you cherry-pick some good mining stocks you'll do well.
check out IGR on the ASX...it has legs.

Rob, the tough part is knowing when to flog it. It's real price ought to be way higher than where it is right now. The buggers are screwing the scrum.

@ Steven

"The exodus seems to consists of truck drivers and other mining workers"¦.ie semi-skilled"¦going for high pay in tough conditions"¦money they wouldnt get near here in NZ"¦.no biggee"¦."

Employment in the resources states of WA & Qld has dropped by approx/close to 10% each. The pick up in emplyement is in the other states.

@AlexW, In which case watching these states for a drop in un-employment means we should then see a move back to OZ by NZers...if Im right...but if NZers are over there but get no un-employment then maybe they are not recorded in those figures....its like looking through fog....bloody hard....

If those states remain high un-employment but migration picks up, then that's other states and the skills are in other areas...

The QLD & WA job figures in overall percentages. (5.8% in WA isn't really that bad)

http://www.abc.net.au/news/stories/2009/10/08/2708810.htm?section=australia

The State Opposition says Queensland has become the unemployment capital of Australia.

Last month, the state's jobless rate rose from 5.5 to 6.3 per cent, in seasonally adjusted terms.

It has not been that high since 2003.

The only other state where unemployment increased was Western Australia.

The jobless rate there increased from 5.4 to 5.8 per cent.

Opposition Leader John-Paul Langbroek says Queensland is the only state with unemployment over 6 per cent.

"This is a state now where we've got nearly 150,000 unemployed people - 40,000 more unemployed since the state election in March," he said.

@Steven

Imagine this : If every country prints as much as the US to keep parity (China money supply growth is 25% YTD annuaised). What would happen ?

The USD can go down 50% but againsts what currency / commodity if all country keep pace with USD money supply growth?

in a worldwide deflationary scene, asset prices will not go up, but short term speculative assets will be bought and gold will be kept to keep wealth from futher fiat currency depreciation....This is the situation right now. Stocks and equity are high as a speculative bet by banks unwilling to lend but is flush with cash by central banks stimulus....Gold is rising as investors flee from fiat currencies.

The final result when this is all over ?? EITHER : High inflated prices for all assets as we price to accomodate all the money being printed OR lower relative prices after excessive moneytary printing destroys every economy....(aka Japan )

What if other currencies also follow US dollar's free fall? would that be fair to achieve balance of trade?

Gold up US$ down because of one person - wow!?? How sensible is currently the world economy system ? Is there already a hidden massive economical world war for dominance?
please listen:
http://www.politico.com/news/stories/1009/28091_Page2.html

...and my next question - how far away are we from the collapse of the monetary system ?

http://www.youtube.com/watch?v=nWyygiyPbdA

@Harriet,

Perhaps, but they've got to find it first. Anyway 'they' are already confiscating your wealth through inflation.

"The best way to crush the bourgeoise is between the twin millstones of inflation and taxation"

Lenin

This is begining to sound like Stagflation, low demand with inflation.

If the Asian countries are trying to keep the USD up by buying it with their own currency, this will increase the amount of their currency in circulation. Their own form of QE. The premise is that if you keep your currency low, you will get an export lead recovery, but where are the importers?
If they haven't got a way of recycling this extra liquidity our of their domestic economy it will cause inflation.
The USA is controlling the liquidity (in the short term) with the banks redepositing the fund with the Fed. This keeps the liquidity out of the domestic economy.
Japan has their domestic savers and the carry trade. ie pushing their liquidity in to the NZ property market.
China must be pouring liquidity in to its domestic economy (beause the CNY can't be lent to other countries like the Yen) so they can keep buying USD to keep the basically strong CNY declining in step with the USD.

There appears to a gigantic game of double or quit going on. The economy of who ever blinks first is going to implode.

NZ best bet is to keep out, it doesn't even have a table stake, much less enough to play.
As the NZD rises, our foreign debt decreases. Its NZ's best way to do the USA equivalent of inflating away the debt.

Alex / Bryan : How are your breasts ? If you stop tweaking 'em , you'll see this idiot spammer ( above ) has got several shots past the goalie !