To fight the falling U.S. dollar, world central banks are taking matters into their own hands.
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New York, NY (PRWEB) November 02, 2012
Profit Confidential, an e-letter of Lombardi Publishing Corporation, a 26-year-old consumer publisher that has served over one million customers in 141 countries, reports that because the U.S. dollar is slumping, the central banks around the world have turned to printing money in order to stay competitive. While this will improve exports in the short term, in the long term, it could lead to wild inflation.
In a recent article, Lombardi Publishing Corp. founder Michael Lombardi notes that as the U.S. dollar declines in value, other countries experience higher American prices for their exports, stunting demand. To combat the imbalance, central banks are beginning to question the value of their own currencies.
“To fight the falling U.S. dollar, world central banks are taking matters into their own hands,” said Lombardi. “They are either choosing to print more of their own money, or buying U.S. currency using reverse-dollar swaps. No matter what techniques the central banks employ to devalue their own currency, in the long run, they’ll end up having to tackle high inflation.”
The Central Bank of Brazil has intervened in its currency market in an attempt to peg its currency in line with the U.S. dollar in order to keep exports flowing, reports Lombardi. (Source: Reuters, October 23, 2012.) Similarly, the Central Bank of Peru purchased almost $200 million U.S dollars to keep its currency from appreciating. (Source: Bloomberg, October 15, 2012.) The Hong Kong Monetary Authority has flooded the currency market with 14.3 billion Hong Kong dollars to keep its currency from rising. (Source: BBC, October 24, 2012.)
Lombardi adds, “The currency market is anything but real, and central banks are intervening in order to keep their currencies artificially lower, compared to the U.S. dollar. What we are seeing is an ongoing debasement of world currencies. More central banks will follow suit. Eventually, those central banks will have to deal with out-of-control inflation.”
Founded in 1986, Lombardi Publishing Corporation, which has served over one million customers in 141 countries, is one of the largest consumer information publishers in the world. For more information on Lombardi Publishing Corporation, and to get their popular Profit Confidential e-letter sent to you daily, visit http://www.profitconfidential.com. Or, visit http://www.lombardipublishing.com/customer-service.html.