PIMCO Sees An End To The Currency Wars

Tyler Durden's picture

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
qussl3's picture

Well they can always buy the RMB.


trav7777's picture

ROTFL...a currency backed by even more bad debt than the dollar.

The truth of what PIMPCO says is that the dollar is a piece of trash but that there is nothing nontrashy that's out there as an alternative that banksters can still print.  Therefore, it's the do-nothing case

qussl3's picture

The dollar is a piece of trash with the biggest stick in the history of mankind.


Popo's picture

It is politically incorrect to say this, but when people call the dollar "unbacked",  it's important to bring it up:

When you have (by far) the strongest military in the history of the world, your currency is hardly unbacked.

Furthermore:  The US military buys the United States control of the Middle East.  Look at a map of US military bases and try your hardest to avoid the obvious truth that the US Military Empire is an oil empire.    

If the United States dollar was a piece of toilet paper, as you suggest -- it would not be as strong as it is.

Of course,  the US military empire isn't doing so well -- which is contributing to the dollar's decline.  And the dollar will likely continue to decline.  But to suggest that the dollar is "unbacked fiat" shows great ignorance of the global economy and balance of world powers.   The dollar's value has always been backed by the military, which enforces oil treaties, which in turn forces oil to be traded in US currency.




Ghordius's picture

+1 I can't agree more.

Popo, I get a serious case of Cognitive Dissonance when I see your avatar and pen name vs what you actually write

oldman's picture

Thanks, t777

"Therefore, it's the do-nothing case"

Now, that say a lot!

on behalf of the 'do-nothing dudes'

snowball777's picture

And right now there is not a single viable alternative to the dollar.

Intentional blindess, bitchez

SheepDog-One's picture

Wow, no alternative to the worthless dollar. Insane.

fuu's picture

Totally OT but when were we invading Iran again? I was sitting around with popcorn all weekend and nothing happened.

Mad Cow's picture

The best thing to do, is to just keep a steady flow of popcorn.

DosZap's picture


Amazing is it not?.

Not a single one out globally more valuable than the worthless USD.

This SCREAMS for honest money.

Gold & Silver.

If only the masses would awaken.There are numerous currencies that are FAR ahead of the USD in value, and their economies far more stable.

fuu's picture

Yes what we need are currencies dependant on 2 separate utilities.

White.Star.Line's picture

The currency wars are playing out like a juvenile comedy.

The headlines are hilarious-
Monday - Dollar up against Yen, down against Euro
Tuesday - Euro falls on debt worries, dollar down due to oil supply worries. Wednesday - Swiss Franc rises as safe haven, Euro, Dollar down
Thursday - Dollar, Sterling rises as PM's lose appeal
Friday - Deflation fears in the morning causes all fiats to rise, inflation fears in the afternoon causes them to fall.

The currency wars are nothing more than bankrupt nation's throwing marshmallows at each other.

RobotTrader's picture

I wonder how the Forex Megadroid "Let the money roll in" programs have fared this year???

Orly's picture

Not wonderfully.  I sense that giant banks were using it to trade Euros, in an inverse fashion, of course.

I don't know about stocks but it seemed that every time there was a sell signal in Euros (on an H4, Daily or Weekly chart...), by some miracle, some fantastic announcement would be made that roundly destroyed that technical set-up.

It is still going on.  Just last week, it was...gasp!...another round of the Chinese will buy it all.  Just how that would happen, so one seemed to care.  It seems the half-life of these deliberate machinations is running shorter and shorter, so we'll see what happens.


nathan1234's picture

After all it's just paper. Print some, swap some and trade some. You think the bankers with their no trading loss will ever give up this lucrative trade!. Like asking the Fed to quit and repeal the Act

SheepDog-One's picture

Sure there will be an end to the currency wars, when they surprise everyone with a sudden world collapse, and 'Phoenix' it all back with a new 1 world currency, 1 world govt. Duh.

iLoveMisesToPieces's picture

No alternative my ass.  Creditors are going to get bored with being paid back in worthless paper at some point.  There will be a sound currency introduced in the next two years out of necessity.  Then it's Gresham's law, bitchez.

rufusbird's picture

As iLoveMisesTo Pieces points out, things can change. The resulting chaos will be caused by lack of a widely accepted alternative...

dark pools of soros's picture

they'll let the debt mountain climb for a long time..  since only the sheeple have to climb it (or so they convince them too)

topcallingtroll's picture

We may see goldilocks or mild contraction for a while.

swissinv's picture

At the end of the day its all about the dollar and I'm afraid, the US cannot afford high interest rates. I also highly doubt that US could afford to default without losing the reserve currency status. Losing the reserve status means that oil is getting f... expensive. I still believe in a Q3 and further currency wars. I migh change my opinion when a integer and credible person such Ron Paul is running goverment. However, shall he find out that Fort Knox is empty, he has no other choice to cump up with Bernanke and co.

proLiberty's picture

Since all these central bankers went to the same schools and learned from the same textbooks and most importantly only follow Keynes, they are all in the same social club when the meet at Davos.  They wink and nod with each other, and support each other by "co-inflation".  If they all inflate at about the same rate, the FX cross never changes much and nobody gets alarmed.  However, over time, commodities will respond which we see in gold, oil and cotton. 

When coupled with a tax on incomes and especially on nominal gains of assets, this is the biggest scheme of theft by government in all human history.



cranky-old-geezer's picture

When coupled with progressive tax on incomes and siphoning off your purchasing power, this is the biggest scheme of theft by government in all human history.

There, fixed it.

iLoveMisesToPieces's picture

And not to mention the fact that in order to have a functioning economy, you need a funtioning capital market.  They keep inflating and inflating and all the hot fiat will continue to chase Groupon IPOs and NFX and other stuff that does absolutely nothing for organic ecnomic growth.  Why take the risk of what could be the next be thing when you can take the sure bet of pump and dumping the heard with freshly printed money?

cranky-old-geezer's picture

PIMCO Sees An End To The Currency Wars

Yea, when they all turn to toilet paper.

InvalidID's picture

 Nice to see PIMPCO catching up. This was old news a month ago.

To Quote myself here on ZH a week or two ago:


 So basically, all we need is for the dollar to be the last man standing. Doesn't matter if that last man has been beat to shit, he's all there is.


Ben the Bankie has succeeded in putting the world in it's place (as seen by him of course) in cornering the Chinese and Bitch slapping the Euro around like a pimp.

Orly's picture

Saw the movie Centurion the other day.  Definitely worth the dollar rental, though a strong caution is in order for gore and blood.  I never knew about the Roman Ninth Legion.

In it, two soldiers are running from wolves; one a weakly but conniving Roman regular and the other a conscript from Namibia.  Needless to say, the African was far out-running the other, so the Italian feigned an ankle injury and fell to the ground, writhing in "pain."  Out of kindness, the Namibian returned to help the man move along, lest he become feral canine breakfast.  In return for the kindness, the sleazy Roman slit the conscript's Achilles tendon, got up and ran away.

It's the old story: I don't have to run very fast; I just have to run faster than you.


rufusbird's picture

 the conscripts name was Lehman Brothers...

InvalidID's picture


 I was thinking Northern Rock... Somehow no ones talking about England, but that's where this all started.

Orly's picture

No offence but it seems that's the way They want it.  If the truth about the UK financial system were to come out, it would be game over.

InvalidID's picture


 I couldn't agree more. Everyone is looking at China, America and, Greece. Fact is on a per capita basis England is in worse shape than any of the above. Last time I checked external debt in England is somewhere in the neighborhood of 140k per person, meanwhile we're worried about Greece with an external debt of under 50k per person. (Those numbers are going to be a bit outdated, so don't bash me over the head with em)

 The real catch is that England doesn't produce ANYTHING.

lookma's picture

Who knew, somebody doesn't know what the hell they are talking about:

Aside from the 60% that I mentioned earlier, global reserves include about 30% in euros and the rest is mixed. Given current circumstances in Europe, we would not expect the euro to supplant the dollar." Oddly, there is still no mention of such currency alterantives as precious metals,

Hmmm, I wonder why someone would think a comment pointing out the EURO had risen to @30% of world currenecy reserves has nothing to do with gold???

 It appears the commentator is woefully ignorant of the most rudimentary basics of the euro.  Go look here (http://www.ecb.int/press/pr/wfs/2011/html/fs110406.en.html) and tell us about the most prominent asset on the balance sheet (hint - its the one listed first).  Then maybe mess around at FOFOA's blog, perhaps you could start here - http://fofoa.blogspot.com/2011/04/reference-point-gold-update-2.html

Learning - its not just for smart asian kids anymore!!!!  Shocking as it is, anybody can do it!!!!

InvalidID's picture

 A couple of problems arise when we say things like the Euro is backed by gold.

  • We assume you would be allowed to cash in on that.
  • We assume there is really as much gold as stated. I have as much faith in the Euro's gold stock pile as I do in Fort Knox.
  • This is the killer. In a world of fiat currency why would you back your money with gold? If I can print trillions of dollars out of thin air and buy gold backed Euro's, then cash in on said gold... See the problem here?
oldman's picture

"This is the killer. In a world of fiat currency why would you back your money with gold? If I can print trillions of dollars out of thin air and buy gold backed Euro's, then cash in on said gold... See the problem here?"

I don't see a problem with buying a gold backed currency, letting the dollar tank and then buying in your debt at 20 cents on the dollar.

especially when gold is so cheap;

and we don't have any gold in ft knox;

and we would never allow our gold to be cashed in on except in default---never traded for paper

been wondering for five years now what is really going on at the fed----could be the trade of all-time

next best thing: do-nothing and allow the universe to work it out


InvalidID's picture


 I'm not sure I follow you. Who doesn't have gold in Fort Knox?

 Who wouldn't allow gold to be cashed in?

 Who's going to buy dollar backed debt for .20 on the dollar? T-Bills are going for negative returns right now.

 Lastly, how exactly is gold cheap?

oldman's picture


All of the conspiracy theories in the world may not sway me, but some dreams are to powerful to ignore; I will give you a laugher because if anyone told this story to me I would laugh, though silently out of respect for the power of the universe.

A few years ago, I awoke from a dream in which someone told me; thereis no gold in ft. knox, bush1 took it and no oil in those salt domes because bush 2 took that.

I was wowed by this dream for several days and then decided to write a novel about it, but had no technical knowledge with which to make a believable tale, so I let it go.


Now, the IEA is doing something very silly and maybe the reason that the US is a part of it is that there is no strategic oil reserve, and this is a good time to turn that deficit into a cash cow-----digital accounting, i understand, is marvellous with the guns, media, and power on one side.

Now, all of this flap about an audit of ft. knox is unsettling me----what if----? And no I do not know a thing about the mechanics-----tungsten bars, german bars, no bars-----we, hopefully, will have an audit to put all of this to rest.

Now, if we had a gold-backed currency, it could be part of the indenture of bonds that they would be redeemable in specie only in the case of a default at whatever value the pricing mechamism was at the time of issue.

A de facto gold-backed currency is CHF because the Swiss do have enough gold to back theircurrency and the will to stave off 'austerity' with their discipline. Trade cheap dollars for CHF, tank the dollar, and buy'em back; that's what I'da done along time ago rather than attack other nations as a goddamned foto-op to be elected---I'm a violent guy, but one who has sworn not to use violence, so this would be my only alternative, probably.

And why I espouse 'do-ing nothing' as an escape route from this matrix we have accepted as reality---

I'm not a trader or traitor, but in my day which was 20 years ago any bankrupt bid was about 20% with me always coming up empty-handed with an unanswered bid at 15%-----You remember WPPS 4%5, i suppose?


Gold is cheap at $ 1500/oz up to $2500 for me because losing on this play is a zerohedge: my income is in US$.

T-bills are a cash instrument and a negative yield is what they are worth considering the fees charged by the banks here with a near 0% return.

So there you have my reasons and a long boring tale about a do-nothing dude who wants only "to live in a healthy and happy community that includes all species and our mutual habitat"(My political affiliation).

End of story and too damn wordy, at that---I apologize ahead of time, my friend. 





Urban Redneck's picture

The war can't be over - no one has won yet.  Besides the central bankers have been "innovating" so much in recent years in the domestic ops side of the monetary policy shop, that there are a dozens of other tricks they can deploy.  If the war is actually over then there must be peace (or at least calm) in currency markets- which seems rather unlikely since the opportunities for making big profits or receiving big bailouts are almost non existent in a market with no volatility or volume.

InvalidID's picture

It's possible the war is over (or nearly so) because the other guys have surrendered. If this is the case we'll see an orderly breakup of the Euro, or something resembling it. Also, China's peg to the dollar will loosen.


 If not, war on.

something fishy's picture

Perhaps this means our old friend the carry trade is back