Emerging Markets Are The Future, The U.S. Dollar And Euro Are Doomed

Stock-Markets / Financial Markets 2011
Jan 17, 2011 - 08:30 AM

By: Larry_Edelson

Over the past several years I’ve repeatedly given you major warnings on several critical issues affecting all of us.

Chief among them have been the ongoing devaluation of the U.S. dollar … the phenomenal rise of China and emerging markets … how the seeds of inflation were being sown … and warnings of imminent rampant price rises in food, energy and consumer staples.

Today, I’m going to tie them all together for you. And you will see that not only am I right as rain, but all of the above is happening now in spades.

First, let’s take a look at the U.S. dollar. Since the end of 2001, the U.S. dollar has lost 37.9% of its purchasing power against a basket of currencies. That’s bad enough. The problem right now is that the U.S. dollar’s bear market is not over, not by a long shot.

In addition to the Fed printing at least another $600 billion of fiat money — as you well know by my recent writings — China is about to give Washington what it wanted all along — a much weaker dollar against the Chinese currency.

All you have to do to understand this is look at the motives behind it. Washington believes the U.S. economy needs a major dose of inflation. To get asset prices moving higher and to get consumers to start spending money again, out of fear that prices will be higher in the future.

Right or wrong, that’s what Bernanke wants … that’s what Washington wants … and that’s what they’re going to deliver to you. Come hell or high water, they are going to inflate prices by deflating the purchasing power of the dollar, even if it hurts tens of millions of savers and makes life very difficult for the poor.

Don’t get me wrong. I am not siding with Washington. I am just accepting reality for what it is. Until our leaders accept ideas like the ones I presented in my September 20, 2010 column titled 10 Steps to Save America …

And place a moratorium on ALL debt, then monetize all debt, issue every American citizen bearer-coupons … a new currency … and equity shares in a newly re-organized U.S. government — inflation through a dollar devaluation is coming, big time.

And China is about to help Washington. You see, China needs the opposite of what Washington wants. Washington wants inflation, but China wants some deflation, to cool off price rises, and to increase domestic consumption by giving its currency more buying power for the country’s 1.35 billion consumers.

Like yin and yang, Washington and China are tied together. Beijing knows this, and that’s why I’ve been warning you to start aggressively preparing for a Chinese yuan that increases in value versus a U.S. dollar that keeps losing purchasing power.

But for those who claim a little “deflationâ€