Gov't waste that the Tea Party won't touch.

[Anomalocaris]

You can hedge fuck all against a collapse in the global reserve, every action leads to other problems, panics, bidding up prices etc. Nobody is going to make money off it, the best anyone can do is limit the amount of damage that they take.

Whose currency is the reserve currency is in the long run something of a flotsom on top of the basic global productivity. Ultimately diversified weath should correlate to the fundamental productivity of the entire global economy. The fundamentals would argue that the total global productivity would triple on per capita basis in the next 3-4 decades as the percentage of world's population living in highly productive developed economies rise from something like 15% to something like 50%. If most of your wealth is disposible and you diversify it to the growth potential of different economies, you should become three times richer in relation to the average working person tied to the output of the American economy. So the fundamental mechanics in place is such that if the rich Americans don't get richer despite the dubious economic growth potential of the American middle class , then they are simply too stupid.

So the rich are more insulted from the result of any action that would stunt the American economy, because they are more able to leech off the growth of the rest of the world's economies.

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That's not the case in a lot of circumstances, especially in countries where a lot of the raw materials are imported, the less value the currency has the more it costs to buy the products you need.

It depends on how much value is add in your economy, not how much of your raw material is imported. If you add little value to the raw material with whatever it is that you do with the raw material, then your low currency value will do you no good. If you add significant value to the raw material, then your low currency will do you a great deal of good. Example of China suggests that in fact, while you do need to add some value to benefit from low currency, you don't need to add a whole lot of it.

Conventional wisdom is that a weakening currency is a boon for economic growth and exports; however, history does not support this view.

For example, during the 20-year period from 1971 to 1991 - often referred to now as an economic miracle - the Japanese yen tripled in value against the dollar, an average appreciation rate of about 10% per year. This increasing purchasing power enabled the Japanese to enjoy steady economic growth and rising living standards. Over that time, Japan’s GDP grew at an average rate of 4.5% and net exports increased fivefold. Government debt as a percentage of GDP fell slightly to about 20%.

Over the following 20 years, from 1991 – 2011, the Japanese economy has been dead in the water. Yen appreciation slowed considerably, with the currency rising by approximately 50% against the dollar, or about 2.5% per year. However, over that time, the Japanese economy and net export growth essentially stagnated, with GDP growing by less than 1% per annum and government debt exploding to over 120% of GDP.

http://peterschiffblog.blogspot.com/2011...nomic.html

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Even at it's face value, his logic is rediculous. It is not the rate of appreciation that hurts one's economy, it is how much it has actually appreciated. Earlier, rate of appreciation of Japanese yen might be high, but the value of Japanese currency were still low. Now the rate of appreciation might be low, but the value of the japanese currency is ready high.

In detail, his discription of the average rate of appreciation of the Yen against the dollar between 1971 and 1991 disingenuously avoided mentioning that key fact that much of this appreciation (66%) in fact occurred in just 2 years - between 1985 and 1987, and the key fact that much of Japan's huge export growth occurred prior to 1985, and the key fact that the huge rise in yen in those 2 years directly precipitated the massive property bubble which collapsed in 1990 and which was responsible for stunting Japanese growth since then.

He seems to be a lawyer trying the set the guilty free.