Ben Bernanke’s Quantiative Easing is destroying the dollar. The destruction is worse than it appears when compared to a basket of currencies because many currencies in the reference basket are also being destroyed at various rates. The results of economic stimulus around the world in an effort to fight off the economic crisis is producing “beggar-thy-neighbor” effects, intended or not. China is overtly inflating their currency to maintain the peg with the deteriorating dollar.
The result of Bernanke’s dollar destruction doe not show accurately when the dollar is measured against a basket of currencies, many of which are dramatically losing their purchasing power.
To get a feel for the deterioration in the dollar versus other currencies (and precious metals), the following chart is useful:
Over the past year (ended March 31), only 4 entities declined versus the US dollar. “Mighty” currencies such as the Ringgit, Zloty, Sol,Ruble, Pesos (3 of them) and the financially-imploding Euro were some to outperform King Dollar. The Swiss franc, not surprisingly, was the strongest fiat currency.
True currencies like gold, silver and platinum made the Swiss franc look weak and the dollar only weaker.
Thanks Ben!
H/T to Financial Sense for the chart which was originally prepared by Bloomberg.
