Inflation Alert: Obama Began Currency Wars in 2010, China On ‘High Alert’ On Inflation, U.S. Dollar’s Share of Central Bank Reserves Plummets, And The Principal Driver Of US Inflation Just Made A Big Up Move
Rickards say’s The the U.K. Pound Sterling will be as of now the Biggest Loser as they have no Gold to fight with….
China should be on “high alert” over inflation after February’s figures exceeded forecasts, central bank Governor Zhou Xiaochuan said, signaling a heightened focus on controlling prices.
Monetary policy is “no longer relaxed” and is “relatively neutral” as demonstrated by a 13 percent target for money-supply growth that’s tighter than expansion in the last two years, Zhou, head of the People’s Bank of China, said at a press conference today during the annual gathering of China’s National People’s Congress.
Zhou’s comments add to signs that officials are tightening policies even as the recovery in the world’s second-biggest economy shows signs of weakness. While the central bank has left interest rates and lenders’ reserve requirements unchanged since July last year, the government this month intensified a campaign to control home prices.
As the world’s central banks look to diversify their reserve portfolios, they’re cutting back on U.S. dollars and the euro and buying more gold, Japanese yen and Chinese yuan, according to a report released Wednesday from the World Gold Council.
The U.S. dollar’s share of total reserves fell from 62% in 2000 to 54% in 2012, according to the report.
Official reserves of global central banks grew to more than $12 trillion in 2012, from $2 trillion in 2000, the WGC said.
Data showed a significant shift away from the U.S. dollar over that 12-year period, and the share of “other” currencies in reserves has tripled in absolute terms since 2008, it said.
The bond market jitters will persist in the near-term.
Albert Edwards, the bearish strategist over at Societe Generale, thinks inflation is coming to the U.S.
“Note the recent release of the US Productivity and Cost data shows that the upward charge in unit labour costs is intensifying,” writes Edwards in his latest research note.
“Most economists consider unit labour costs to be the principle driver of inflation and we can see from the chart below that core CPI inflation ebbs and flows with unit labour costs (we use a 2y% ch on the labour cost data to smooth excessive volatility ?hence it misleadingly appears that CPI leads slightly). After drifting downward for the last year to below 2%, core inflation may be set to rise more rapidly as unit labour cost inflation drags it higher. This would undoubtedly hurt an already jittery bond market.”
Here’s his chart:
Jim Bianco, president at Bianco Research, talks with Bloomberg’s Mark Barton about the gold market and why now is the time to buy.