NOWHEREMAN

Currency Market: Where Are the Value Points?

Emerging market countries are more likely to sell Dollars than raise interest rates to stem their currency losses. Russia started this a few weeks ago, Brazil a few days ago and Taiwan refuses to buy more US debt. I expect that all of the Countries currently suffering from an erosion of their purchasing power will start selling Dollar holdings to prop up their currencies.

From what I have seen, the Gulf States hold $2.5 Trillion of US debt and China $1.8. With the demise of oil's pump into their Economies The ME is contemplating selling this Dollar holding to continue their Economic Expansion.

Meanwhile, The Yuan has risen around 20% in tandem with the Dollar, translating into a deterioration in exports. Buying more Dollars is not an option.

To put it Mildly, The Dollar is in Bubble Mode not only in Price but also in the unprecedented explosion in its monetary Base.

Meanwhile Foreign Debt Reserves look to be Dropping.

If the amount of new dollars shloshing around the world exceeds US GDP, which is likely since GDP will drop, how long can the Bubble be sustained before the bleeding restarts in earnest?