China is making every effort to fortify their currency, leading to their October inclusion as a member of the International Monetary Fund’s Global Reserve Currency Club. Along with Brazil, they’ve been outspoken about the United States Dollar serving as the global currency lynch pin, for some time now. As the greatest foreign owner of US debt, they had a tremendous opportunity back in 2009 to expose and exploit the soft underbelly of the US economy, by abruptly shifting their funds from US dollars to other currencies.
If not for a surge in Eurozone bond sales to foreign investors, during early 2009, followed soon after by a string of EU country failures removing the spotlight from American economic concerns, then the potential sell-off that could have ensued was averted and the damaging fallout was not able to materialize. But in case you hadn’t noticed, no one in the Fed, government, or anywhere else really acknowledged the danger, its proximity, or its ongoing potential for disaster.
When will we find the source of US economic ether? Does it begin with the Fed’s amazing ability to somehow soothe investors with what amounts to a certifiably ineffective, deceitful and ridiculous Quantitative Easing Program? Is it the government, who has found a way to get current economic concerns completely overlooked, by shifting attention to artificial employment numbers and an inane presidential race, which by all indications offers no one with a desire to address truly urgent economic issues or draw attention to these matters in any meaningful way.
The US managed to dodge a bullet in 2009, but the waters are as dangerous, even more dangerous, than ever. The greatest danger is the fact that no one even noticed how close we came to a potentially treacherous precipice and because it’s gone unnoticed, somehow the ether has seeped back into the room and everything is once again wonderful. What’s it going to take?