Since the dawn of humankind, power hasn’t changed very much. If you can use psychological or legal power, that’s great. If you can’t, it always comes down to brute force.
This weekend, the G-20 gathered to discuss whether the spooky currency wars would put a damper on other Halloween horrors. Although everyone “promised” not to devalue their currencies, the rhetoric has been about as meaningful as a proposal on reality show The Bachelor.
So, what is the takeaway and is the US officially irrelevant?
The Markets say, “Yes”
Even after a global announcement to forgo further currency erosion, the markets are still dumping US Dollars. “The G-20’s joint communiqué Saturday didn’t have enough teeth to trump worries that the U.S. Federal Reserve will soon announce a huge quantitative-easing program, which will weaken the value of the dollar,” reports MarektWatch. As a result, the US Dollar is now hitting 15-year lows versus the Yen. Watch what they do, not what they say.
US Treasury Secretary Tim Geithner says, “No”
As the Chinese dictate terms to the US behind closed-doors and the global media ex-US shows how it really is, Tim Geithner et al continue to grand stand for the apparently ignorant American masses. At the G-20, The Washington Post reports Geithner told China “This requires a shift in growth strategies by countries that have traditionally run large trade and current account surpluses away from export dependence and toward stronger domestic demand-led growth.” So long as US leaders don’t address the real problem — buying things with debt and exporting wealth to countries selling value-added goods and services — the US stands to continue losing relevance in the balance of power.
What do you think about the G-20? Is the US still in the driver’s seat? Let us know in the comments below …