Lately several credit rating agencies lowered from AAA to AA the US credit rating. Maybe thinking of school scores would be helpful, although it’s somewhat hard to relate to this cut if you’re not knowledgeable about standings.
The US dollar has had this standing since the ending of WW II and is the reserve currency of the world. Most folks in the US don’t realize that this exists or what it means. If you’re a citizen of another nation like China, to buy oil that’s priced in US dollars, your money, the Yuan must be converted (traded) for US dollars and US dollars used to buy the petroleum.
What this reserve currency standing has done is to not keep high for Americans and else. There’s another advantage of being the world’s reserve currency, the US can actually print more cash which it’s been doing.
The Federal Reserve Bank attempted Quantative Easing the market to spark and save failed banks. QE1 failed miserably at stimulating the market, because the banks that were saved did not give the cash. So QE2 attempted, and are firmly contemplating QE3 for Jun 2012. That implies that QE2 neglected as did QE1. Are we going to discover at some stage in the future it’s QE5000, to coin the term Mel Brook’s Spaceballs’ about Rocky in’ from the news reporter comment.
Yu Yongding, large banks like Goldman Sachs and a former advisor to the Central Bank of China are forecasting a steady and slow fall of the dollar. Yu considers that from 1929 to 2009 the greenback’s purchasing power has decreased by 94 percent.
If the US dollar were to loose its standing as the reserve currency of the world, costs in the US would escalate. There’s a group of states encouraging the notion of a money basket rather than the US dollar. States are concerned about the erosion of the purchasing power of the US dollar and an US debt default. This concern is partly founded on the bailouts from the banking system fall all of the bad debts were born by the authorities of the world.
“There’s cash everywhere,” Zhu said in a 2007 address. So individuals are investing in assets without a thought of the dangers they’re taking.”
The Xinhua news agency said “Washington’s political elites” need to have the bravery to defuse the debt problem and reveal the “wisdom and conviction not to further endanger the delicate global economic recovery.”
The news agency said U.S. politicians “have never shied” from lecturing other nations about their international obligations, but “now it’s high time” the U.S. “revealed a sense of authentic international direction.”
Wen said his government will do its part to help facilitate the international debt crisis by fostering national consumption and keeping economic stability. China is offering new investments, and is the biggest foreign lender of America.
States all over the world attempting to evaluate the impact of the US credit downgrade on the international market are beginning to speak out.
China issued a grim warning to America, criticizing the state’s “debt dependency” and saying the usa must comprehend it cannot borrow its way out of economic problems. A comment by China’s official Xinhua news agency said the world wants a new, secure international reserve currency.
India, among the world’s top emerging markets, called America’s downgraded credit rating a “dangerous” scenario.
How can you protect your wealth, your family and yourself? There are lots of manners, but mainly they need diversifying your assets into investments like Japanese Government bonds which has declared a brand new kind of quake reconstruction bond that offers silver and gold commemorative coins for retail investors from the US dollar, beginning next March.
Or, you could coattail Chinese investments all over the world or better yet invest through purchases of ‘dim sum’ bonds which are yuan-denominated debts in the Chinese Yuan and after a delicious appetizer adored in China named.
And, the outlook over the next five years is about four percent annually. Therefore, if you take the 1.7 percent return, plus that four percent return, it begins to seem rather attractive,” said de Silva.
Ungovernable State and an Insolvent’ referenced as this one as well at this link.