Washington, DC -- (SBWIRE) -- 07/18/2014 -- The U.S. Dollar May Have Reached Its Point of No Return Says Dawn Bennett, CEO, Bennett Group Financial Services, in her latest missive to investors.
George Orwell said, "Whoever is winning at the moment will always seem to be invincible." It seemed appropriate for this past week, July 7, 2014. I'm not talking about a particular athlete that is at the top of his game nor a particular company that is considered the best in their industry. I'm speaking about the U.S. dollar and the Federal Reserve. Both have seemed invincible for so many years, but now I wonder.
To my mind, the Federal Reserve has failed. The Fed told us that printing the dollar would equal growth, and in their effort to prove this hypothesis, the Federal Reserve embarked on Quantitative Easing I, Quantitative Easing II, Quantitative Easing III, Quantitative Easing IV, Operation Twist I, Operation Twist II, and at the same time kept interest rates at zero for over five years. All together, the Fed has printed nearly $4 trillion, and the end result has been the single weakest recovery in 75 years.
So I ask, "Just how pungent does today's economy need to smell before everyone understands it hasn't really been recovering? Actually, for the last few years it has been almost flat-line dead. Our first quarter GDP had a print of nearly negative 3.0 percent, and the Fed had the audacity to tell us, "We are recovering." The fact that the economy shrank like this despite all the Fed's interventions over the last five years is proof point-blank that the Fed's economy models and theories are wrong.
Now, the question being asked all over the world except for in America is, "Will the Federal Reserve be successful in assisted economic suicide of the U.S. economy, and, with that, the value of the U.S. dollar?"
In my opinion, perhaps the greatest crime committed by the Federal Reserve is the destruction of the American dollar. Since 1948, the dollar has been the world's reserve currency. Dollars are still accepted almost anywhere in the world, but I think its days are numbered. Since the 2008 economic crisis, the Fed's printing binge has driven the value of the dollar into the ground. Other countries have been forced to devalue their currency in order to maintain competitive prices for their export products, and now they aren't putting up with it anymore, which is why I believe de-dollarization of the world economy has begun.
The Federal Reserve's crazy experiment of printing money out of thin air is a trap set for all of us here in America as well as the rest of the world, and before the end of this decade, if there is still is a U.S. dollar around, it won’t be as we know it today. I'm seeing a very significant shift taking place behind the scenes, and unfortunately, it is being appreciated by very few, this ongoing anti dollar/dedollarization of the world.
While our massively indebted administration has hopes to divert our attention of what's left of the U.S. dollar's impoverished existence, other countries like the BRICS; Brazil, Russia, India and China, are morphing into anti-dollar alliances. On June 10, 2014, Putin's economic adviser Sergey Glazyev actually published an article outlining the need to establish an international alliance of countries willing to get rid of the dollar in international trade, and also willing to refrain from using dollars in their currency reserves. That's strong evidence that the ultimate goal is to break the back of the U.S. dollar.
Even at the same time this was published, Russia announced a much-anticipated energy deal with China, which is the first step in breaking the petrodollar's stranglehold over the rest of the world. They're not going to settle any of their trading in dollars. They're going to settle their contracts in the Yuan and the Ruble. Both nations have admitted they're eager to move away from a U.S. dollar reserve currency, and they're actions are telling us they mean business, which is why I'm saying the U.S. dollar domination is probably coming to an end.
Unfortunately, there's even more that's driving the nail in the dollar coffin: the U.S. government's appalling arrogance over many years when it comes to the banking system worldwide. It has a reputation for bullying foreign banks. The latest one is the U.S. multi-billion dollar penalty on BNP bank, a French bank. The French have taken this very much to heart, so much so, that the French National Bank governor Christian Noyer and a member of the ECB's governing board said that, "The U.S. versus BNP bank case will encourage diversification from the dollar." He also continued by saying that "China has decided to develop the Renminbi as a settlement currency for worldwide use."
That statement, from the head of the French central bank and ECB member, was a direct threat to the world reserve currency, the U.S. dollar. If this current trend continues, soon the dollar will be abandoned by most of the significant global economies. The Federal Reserve's mismanagement and Washington's history bullying to get their way will make even former allies choose the anti-dollar alliance instead of the existing dollar-based monetary system. The point of no return for the dollar may be much closer than generally thought. In fact, I think the greenback may already be past its point of no return. The question all investors need to ask themselves is, “How should I position my investment portfolio in order to hedge against a weakening dollar?
All market data references are sourced to Bloomberg terminal database.
Bennett Group Financial Services LLC, based in Washington, D.C., is a comprehensive financial services firm committed to providing opportunities to clients’ as they seek long-term financial success. Its customized programs are des igned with the potential to help grow, lower overall risk and conserve client assets by delivering a high level of personalized service and skill. For more information, call 866-286-2268 or visit http://www.bennettgroupfinancial.com.
Securities offered through Western International Securities Inc. (WIS), member FINRA/SIPC. BGFS and WIS are separate and unaffiliated entities.
About Dawn Bennett
Dawn Bennett is CEO and Founder of Bennett Group Financial Services. She hosts a national radio program on called Financial Myth Busting http://www.financialmythbusting.com. She discusses educational topics and events in the financial news, along with her thoughts on the economy, financial markets, investments, and more with her live guests, who have included Rock Legend Ted Nugent, as well as Steve Forbes and Grover Norquist. Listeners can call 855-884-DAWN as well as take podcasts on the road and forums for interaction. The show is a great complement to Dawn’s monthly investing seminars that take place at Tysons Corner in McLean, VA, where she discusses investing. She can be reached on Twitter @DawnBennettFMB or on Facebook Financial Myth Busting with Dawn Bennett or firstname.lastname@example.org