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U.S. Policies Will Fail to Avert Hyperinflation

Economics / HyperInflation Mar 25, 2010 - 06:57 AM GMT

By: FutureOfDollar


Diamond Rated - Best Financial Markets Analysis ArticleThe United States send weak economic signals insufficient for a meaningful and sustainable economic expansion required to gain back confidence of national and foreign investors, finds in the present research.  Political decision-making process is paralyzed by numerous disabilities, while external market constraints obstruct economic recovery.  Stagflation is an imminent danger.


GDP numbers have been significantly influenced by government intervention into the economy and are rather poor at a closer look. Employment data shows rising numbers of discouraged and underemployed workers with the unemployment rate remaining high. Government financial obligations including the national debt, Social Security, Medicare, and other benefits and mandatory programs continue to pile up moving the U.S. to the first place in the world for the highest debt to GDP ratio. Budget deficit is growing with no visible turning point. Low interest rates create a risk of stagflation. The market of Treasuries is about to collapse as investors, including China, are losing confidence in the financial stability of the United States.

Weak economy is accompanied by numerous political disabilities making the recovery almost impossible. The country was unable to create a powerful deficit reducing commission. It is unable to cut growing nonproductive military (security) expenses. It does not follow its own economic advice given to other countries in similar critical situations in the past. In addition, it doesn’t cooperate with countries, which will determine the future of the United States.

Finally, market constraints make the crisis in the U.S. even deeper. High oil prices add to economic slowdown and lead to an increase in core inflation. China’s peg to the dollar prevents export growth and creation of new jobs.

All these factors evidence against the future of the dollar as a global reserve currency. Moreover, altogether they indicate increased likelihood of hyperinflation in the near future. was not satisfied with the government’s reaction to the problem, finding that the U.S. will be unable, or even reluctant, to resist dollar depreciation.


   1. GDP

According to the “second” estimate real Gross Domestic Product (GDP) increased at an annual rate of 5.9 percent in the fourth quarter of 2009 compared to the advance estimate of 5.7% released in January. (1)

Real GDP decreased 2.4 percent in 2009 in contrast to an increase of 0.4 percent in 2008. This is “the worst single-year performance since 1946,” Bloomberg said. (2)

Efforts to rebuild depleted inventories contributed 3.88 percent to GDP (more than previously reported), the most in two decades. (3)

Nouriel Roubini, an economics professor at New York University, noted in an interview following the report on GDP: “The headline number will look large and big, but actually when you dissect it, it’s very dismal and poor.”  “I think we are in trouble,” he added. (4)

“Those inventory changes alone cannot sustain growth over an extended period of time,” the New York Times noted, because “as long as the labor market remains weak, consumers — whose purchases make up the bulk of economic output each quarter — will be reluctant to spend money.” (5)

Most of the boost in the third quarter of 2009 was provided by the Government’s program known as “cash for clunkers,” which offered buyers payments of as much as $4,500 to trade in older cars and trucks for new ones. The plan boosted sales by about 700,000 vehicles, according to the Transportation Department. (6)

GDP was also influenced by a significant gain in residential spending activity due to home buyer tax credit. The National Association of Realtors said that nearly half of the jump in home sales in 2009 was directly attributable to the tax credit. (7)  President Obama extended the $8000 tax credit for first-time home buyers till the end of April 2010 beyond its original deadline in the end of November 2009. (8)  It has also been expanded to include more buyers. (9)

Federal Reserve Board economist Jeremy Nalewaik questions the accuracy of GDP (that tracks spending) with respect to the assessment of economy’s performance as opposed to Gross Domestic Income (GDI). While GDP showed a modest rebound in the third quarter of 2009, GDI gave no evidence of a rebound during this period. “These two measures have shown markedly different business cycle fluctuations over the past twenty-five years, with GDI showing a more-pronounced cycle than GDP.” (10)

A genuine economic recovery would be led by real business activity and increased consumer spending. Much of the boost lately was a product of government intervention into the economy. Therefore, there is no ground to say that the United States are heading towards meaningful and sustainable economic expansion.

   2. Unemployment

This past February, the economy lost 36,000 jobs after losing 26,000 jobs in January and 109,000 jobs in December, and the unemployment rate held at 9.7 percent. (11)  The country has not seen such unemployment levels since the 80s. The data below indicates that the unemployment situation generally continues to deteriorate.

In January, the unemployment rate fell from 10.0 to 9.7 percent. According to Reuters “a sharp increase in the number of people giving up looking for work helped to depress the jobless rate. The number of 'discouraged job seekers' rose to 1.1 million in January from 734,000 a year ago.” (12).  The number of discouraged workers rose to 1.2 million in February. (13)

Gallup reported that “19.9% of the U.S. workforce was underemployed during the month of January” meaning that about 30 million Americans work less than their desired capacity. (14)

In its March summary of commentary on current economic conditions by Federal Reserve Districts, the Beige Book, the government finds that “labor markets generally remained soft throughout the nation.” (15)  Although “[t]he pace of layoffs slowed in most Districts. . . hiring plans still remained generally soft.” (16)

The Senate approved recently the bill extending unemployment benefits. The bill costs approximately $140 billion. (17)  If the bill eventually is signed into law, which is highly probable, it will not only increase the deficits but will also worsen the unemployment situation. According to numerous economic studies benefits for unemployed significantly reduce the search effort on their part. (18)  When an unemployed person becomes ineligible for benefits the probability that he or she will find a new job rises “markedly”. (19)

Although many specialists are trying to look for positive signs in decreasing numbers of job losses the overall employment situation remains weak. The growing number of temporary workers does not give an assurance that the labor market conditions have already reached a turning point. When businesses begin to create more full-time jobs this will mark a change in the downward trend.

   3. Financial obligations of the U.S. government

In the middle of February, Obama signed into law the bill increasing the public debt ceiling from $12.394 trillion to $14.294 trillion. This is a second increase in the upper limit on the national debt in less than two months.

Last time, in December, House Majority Leader Steny Hoyer commented that Congress simply had no other choice: otherwise the United States would have to default on their debt obligations what would be another catastrophe for financial markets. (20)

David Ross from Radiant Asset Management indicates in his research that the total obligations of the U.S. government exceed $90 trillion referring to the estimate of the Financial Management Services of the U.S. Treasury. (21)  They include hospital insurance, supplementary medical insurance, and social security. “[T]he collected money (which Treasury has borrowed and Congress spent) falls far short of what is required to fulfill the long-term obligations of those programs, even if it had not already been spent. Almost all of the $90 trillion are promised obligations with no established method of payment.” (22)

Ross points out further: “Including unfunded obligations, the U.S. moves to 1st, well above Taiwan and Zimbabwe, for the highest debt to GDP ratio. . . U.S. total debt plus unfunded obligations total 625% of GDP.” (23)

The Peterson-Pew Commission on Budget Reform stated that “the United States would almost certainly experience a debt driven crisis,” that “could unfold gradually or it could happen suddenly, but with great costs either way.” (24)  “The excessive debt would. . . affect citizens in their everyday lives by harming the American standard of living through slower economic growth and dampening wages, and shrinking the government’s ability to reduce taxes, invest, or provide a safety net.” (25)

Many experts believe that at some point such system of borrowing is going to collapse. Peter Schiff, the President of Euro Pacific Capital, argues that the way the U.S. government functions is that “we borrow money and then when the interest payments are due we borrow money to pay the interest. . . It is one gigantic Ponzi scheme.” (26)

   4. Budget deficit

The United States reached a record budget deficit of $1.415 trillion in fiscal year 2009 that ended in September. (27)  The deficit will probably again exceed one trillion dollars in the current fiscal year as it is already over $651 billion.

The excess of spending over revenue in the U.S. was $220.9 billion in February 2010, as opposed to a deficit of $193.9 billion in February 2009. (28)  This is the largest monthly deficit in the history of the United States. (29)  It is also the 17th straight month in which the government posted a deficit.  (30)

In the beginning of February 2010 Obama transmitted a $3.8 trillion budget for 2011 to the Congress with a record $1.6 trillion deficit. (31)

IMF’s Managing Director Dominique Strauss-Kahn noted at the 10th Annual Herzliya Conference in Tel Aviv that the global crisis had created a problem of fiscal sustainability for many countries that could take decades to fix because of the huge debts built up during the crisis, especially in developed countries. (32)

Federal Reserve Bank of New York President William Dudley said recently in London that it was wrong to “wait and see how things go” in relation to high U.S. deficits implying that the country still does not have a credible exit plan. (33)  Something has to be done already at this point while the situation is under relative control. (34)  Doing nothing “is a risky strategy because it fully exposes the economy to the vagaries of market sentiment and because shifts in such sentiment can have important consequences for both the deficit path and the economy.” (35)

   5. Low interest rates

The Federal Reserve is going to maintain the federal funds rate near zero percent “for an extended period” as the pace of economic activity is going to be moderate for a time and inflation will be, allegedly, subdued. (36)  The government has been keeping the key rate near historical zero percent since December 2008. Rates at this level allow the government to make lower interest payments on the ballooning debt, flood the banking system with credit and drive interest rates lower.

Although, in practice, loan demand remained weak, and lending standards remained tight across the country as banks are cautious about lending during the crisis. (37)  However, low rates provoked “carry trade”, when investors borrow cheap U.S. dollars and buy higher-yielding assets. As the result, international stock and commodity markets grew abnormally within the last twelve months.

These developments produce significant pressure on the dollar. With rising oil prices stagflation becomes the primary risk in a long run. Stagflation is an economic situation in which inflation and economic stagnation occur simultaneously and remain unchecked for a significant period of time. (38)

If this is so, why does not the government raise interest rates?  David Ross states that “high interest rates will mean either substantially higher taxes or a budget that is nothing but interest payments.” (39)

Is there a plan? Although the government does not tell exactly what it is going to do, it is possible to draw a conclusion from its actions that there will be no resistance to dollar depreciation on its part since, according to Ross, authorities will be highly motivated to keep interest rates low and “inflate [their] way out of the debt.” (40)

It is also unlikely that the Obama administration will reduce spending and fight the deficits as the only way out of the debt burden. Sir John Templeton, the John Templeton Foundation, said in 2005: “The psychology all over the world is that people will not re-elect leaders who want them to be thrifty. The voters will elect the government that spends more money.” (41)  There is ample evidence that the current government of the Unites States seems to be driven by this psychology.

   6. The vague future of the market of U.S. Treasuries

The year of 2009 was the worst year for U.S. Treasuries since at least 1978 “as the U.S. stepped up debt sales to help spur growth in an economy recovering from its deepest recession in six decades.” (42)

For the past twelve months the Fed has been actively supporting the Treasury and mortgage markets with purchases of Treasuries and Mortgage Backed Securities (MBS). The Fed had to buy Treasuries in order to suppress the growth in borrowing costs.

Since March 2009 the Fed “purchased $300 billion of Treasury securities and currently anticipates concluding purchases of $1.25 trillion of agency MBS and about $175 billion of agency debt securities at the end of March.” (43)

When the programs end, markets should be prepared for a ‘surprise’, RosBusinessConsulting warns. “If it appears to be that the demand for Treasuries was fueled by the Federal Reserve, the yields on them can grow sharply. This presents great risks for the economy since the borrowing cost is the basis of the whole financial system. And the cost of credit depends on it.” (44)  David Keeble, head of fixed-income strategy at Calyon in London, agrees that “[t]he end of the Fed’s quantitative easing program will hurt the market. We also have to cope with a lot of supply. It doesn’t get smaller.” (45)

When the government leaves the market this would mean that the 5-year, 10-year and 30-year Treasuries will become much less popular, Pimco's President Bill Gross told CNBC in November 2009. (46)

According to the U.S. Treasury Department net outflows from all U.S. securities totaled $33.4 billion in January 2010. (47)  Central banks worldwide were the biggest sellers. (48)  China cut its holdings of U.S. Treasury securities by $5.8 billion in January after trimming them by $34.2 billion in December and by $9.3 billion in November, but still remaining the largest foreign holder of U.S. debt. (49)  Russia’s Treasury holdings fell by a net $17.6 billion in January, while in December 2009 Russia cut them by $9.6 billion. (50)

Jim Rogers, an expatriate American investor and financial commentator based in Singapore, “certainly wouldn’t be buying U.S. Treasuries” and “couldn’t imagine lending money to the U.S. government for long periods of time.” (51)  Pimco’s President Bill Gross said that investors should seek countries where national debt levels are low and reserves are high, while the company was cutting holdings of U.S. debt as the nation increase borrowing to record levels. (52)


   1. Inability to create a powerful deficit reducing commission

During the recent debate on the national debt the Senate rejected a proposed bipartisan commission to suggest ways to reduce the U.S. budget deficit. According to Bloomberg “[t]he legislation would have required that the panel’s recommendations be voted on by Congress without being amended.” (53)

Conrad, of North Dakota, and Gregg, of New Hampshire, said Congress has proven it is incapable of making the difficult decisions needed to reduce the deficit. (54)

Instead of the initial idea of the commission discussed by Congress, President Obama is trying to establish a government-based bipartisan deficit commission.  “The commission would lack any requirement for Congress to act on its advice, it would provide some political cover and big-name backing,” 9&10 News said. (55)  “Such a panel’s recommendations ordinarily could be ignored by lawmakers,” Bloomberg noted. (56)

Analysts say that “a toxic political atmosphere and heavy lobbying from outside interest groups will make lawmakers reluctant to sign off on a plan likely to include a mix of tax hikes and spending cuts that could cause them significant political pain.” (57)  Suvrat Prakash, U.S. interest rate strategist at BNP Paribas in New York, considers that "[t]his is more symbolic than a concrete step to reducing the deficit." (58)

   2. Inability to cut nonproductive military (security) expenses

President Obama called in January for a three-year freeze on spending for many domestic programs as part of his strategy to rein in the deficit. The proposal would save an estimated $250 billion over a decade at the expense of the Environmental Protection Agency and the Commerce, Interior and Justice Departments, while the Defense Department, Department of Homeland Security, Veterans Affairs and unspecified international affairs programs would be exempt. (59)

In addition, the government asked Congress in February for a “defense budget of more than $700bn. . .  – almost 5% of GDP – for next year,” reported.  (60)  This is exactly 1/3 of total budget receipts for the FY 2009.

Obama’s plan raises concerns as being contrary to basic economic laws. Most of the economists agree that one of the basic nonmonetary reasons of inflation is the existence of significant nonproductive government expenses such as military expenses.

The cost of conducting wars in Iraq and Afghanistan pushed the budget into the red during the presidency of George W. Bush. The situation deteriorated after the beginning of the financial crisis when the government adopted measures such as stimulus packages, financial bailouts, the need to support liquidity in Treasuries, etc. Moreover, early in December 2009 it increased its nonproductive expenses by approving 30,000 troops to be sent to fight in Afghanistan.

However important goals of the war could be, military operations are, undoubtedly, very costly for U.S. citizens especially at the time of the financial crisis and growing deficits. Moreover, the situation is not getting better considering that around 40 percent of the war financing has been borrowed from abroad, Joseph Stiglitz, the Nobel Prize Winner, shows in his research. (61)

“We have lots of needs that we are not able to meet because of the war,” he says. (62)

Explaining why wars are expensive he points out that military expenditures are not only limited to direct operation costs but also include (the bigger part) human casualties, future disability costs, loss of income, increased oil prices, opportunity costs, veterans’ social welfare, nonproductive spending, loss of confidence in the future economic situation, increase in the national debt, and so on. (63)

“If we try to stay the course, we are going to spend more and more money,” Stiglitz stresses. “The fact that we financed the war totally by deficits means that when 10 years from now we decide we want to repay that, which I don’t know if we will, the amount that we will have to raise our taxes will be that much larger because the debt will be that much larger.” (64)

   3. Inability to follow its own advice given to other countries

It is quite unfortunate that the United States act contrary to their own advice given to countries that were undergoing economic crises in the past. In his another article Joseph Stiglitz notes on this point that:

“During the East Asia crisis, just a decade ago, America and the I.M.F. demanded that the affected countries cut their deficits by cutting back expenditures -- even if, as in Thailand, this contributed to a resurgence of the aids epidemic, or even if, as in Indonesia, this meant curtailing food subsidies for the starving. America and the I.M.F. forced countries to raise interest rates, in some cases to more than 50 percent. They lectured Indonesia about being tough on its banks—and demanded that the government not bail them out. What a terrible precedent this would set, they said, and what a terrible intervention in the Swiss-clock mechanisms of the free market.” (65)

The difference of approaches in dealing with the current crisis and the East Asia crisis “is stark and has not gone unnoticed,” Stiglitz says. (66)  “To pull America out of the hole, we are now witnessing massive increases in spending and massive deficits, even as interest rates have been brought down to zero. Banks are being bailed out right and left. Some of the same officials in Washington who dealt with the East Asia crisis are now managing the response to the American crisis. Why, people in the Third World ask, is the United States administering different medicine to itself?” (67)

   4. Inability to cooperate with countries, which will determine the future of the United States

IMF’s Managing Director Dominique Strauss-Kahn told that “at the onset of the crisis, world leaders were "scared" and agreed to work together to end the crisis. But now, countries are formulating policies on their own.” (68) "It is absolutely impossible to get out of the crisis without global solutions," Strauss-Kahn emphasized. "I am not sure that's the route on which we are," he added. (69)

Joseph Stiglitz is also of the view that “[t]o solve global problems, there must be a sense of cooperation and trust, including a sense of shared values. That trust was never strong, and it is weakening by the hour.” (70)

Tensions between the U.S. and China are a good example of the lack of cooperation, protectionism and distrust.

China would not yield to foreign pressure for the appreciation of its currency yuan in any form, Chinese Premier Wen Jiabao said in the end of December 2009. Chinese exporters were under strong pressure due to trade protectionism, he said. Figures from China's Ministry of Commerce showed that as of the end of November, 19 countries [including the United States] and regions have launched 103 trade related investigations against Chinese products. (71)

Recently China threatened to impose sanctions on U.S. weapons suppliers, including a major aerospace and defense corporation Boeing, following the government’s earlier announcement of its first arms package to Taiwan. (72)

Shortly thereafter China announced that it would impose preliminary anti-dumping duties of up to 105 percent on broiler chicken imports from the U.S. (73)

At the same time “Majors General Zhu Chenghu and Luo Yuan and Colonel Ke Chungqio of the Chinese People’s Liberation Army… called for the Chinese government to retaliate against the United States economically” for the decision to sell arms to Taiwan by “dumping some US government bonds.” (74)

In response the U.S. established preliminary duties ranging from 11 to 13 % on Chinese steel pipe. (75)  The United States also announced that it would impose preliminary duties on potassium phosphate salts and coated paper imported from China. (76)

These tensions were aggravated by Obama’s February meeting with Dalai Lama, the exiled Buddhist spiritual leader of Tibet. Chinese Foreign Ministry spokesman Ma Zhaoxu said that "[t]he US act grossly interfered in China's internal affairs, gravely hurt the Chinese people's national sentiments and seriously damaged the Sino-US ties." (77)

In between these mutual attacks the Communist Party of China has ordered reserve managers of the government to withdraw from risky dollar denominated assets leaving in portfolios just U.S. government guaranteed debt. (78)

Today China is a holder of the largest portfolio of U.S. debt and foreign exchange reserves mainly denominated in U.S. dollars. Many analysts say that the future of the dollar, and of the United States, depends to the large extent on China. If this is so, is it the U.S.’ best interest to initiate required cooperation and save its currency from the lack of confidence caused by its own negligence?


   1. High oil prices

In January and February 2010, and for the whole fall season of 2009, oil prices predominantly exceeded $75 a barrel climbing above $80 several times, while in summer 2009 oil traded near $70 a barrel.

In 2008 oil went over $140 a barrel. However, the trend was cut by the worldwide drop in stock and commodity prices following the beginning of recession in the United States.

Today nearly 60% of the oil utilized and consumed in the U.S. is imported from other countries. Oil accounts for nearly 40% of all energy utilized in the U.S. (79)

Daniel Yergin, chairman of Cambridge Energy Research Associates, said at the conference in Singapore in November 2009 that "oil prices today do not reflect the world's supply and demand fundamentals. Instead, prices are reflective of the weak dollar and expectations of a strong economic recovery." (80)

Nouriel Roubini, the economist who predicted the global economic crisis, points out in his 2006 article that oil at $70 and higher will have the stagflationary effects. (81)  “The factors that sustained U.S. economic growth in 2004-05, in spite of high and rising energy prices, are fizzling away.” (82)  Taking into account poor consumer spending data “the last thing that a shopped-out consumer with negative savings and increasing debt and debt service ratios needs now is higher oil and energy prices. . . with consumption representing 70 percent of GDP.” (83)

He concludes that “if oil prices rise above $70 and stay there. . .  it is highly likely that the U.S. and global economy could experience a serious growth slowdown and a meaningful increase in core inflation that will have effects on monetary policy.” (84)

   2. China’s peg to the dollar

China enjoys low yuan rate giving its exports competitive advantage in relation to those countries with appreciating currencies against the U.S. dollar. As the result, China is actually “stealing” jobs from many countries because their companies are not able to compete with Chinese producers due to the appreciation of their currencies.

In relation to the United States this means that the country should not count on faster recovery. China’s peg to the dollar makes imports into the U.S. cheaper. This supports high level of unemployment in America. Unemployment prevents the growth of GDP and reduces revenues.

Maurice Obstfeld, Director of the Center for International and Development Economics Research, comes to a conclusion that “[o]ver the longer term, China’s large, modernizing, and diverse economy will need exchange rate flexibility and, eventually, currency convertibility with open capital markets.” (85)

Obstfeld says that currently the exchange rate regime in China is a “managed float within an adjustable [narrow] band.” (86)  “Such a system is incompatible over the long run with increasing openness to international financial transactions.” (87)

Chinese Commerce Minister Chen Deming said the country’s trade surplus slid 50.2% in Jan. and Feb. 2010 combined from a year earlier. (88)  With exports slowing down China needs to boost domestic consumption. However, “a fixed exchange rate, open capital markets, and a monetary policy geared toward domestic goals cannot all be attained at the same time.” (89)

David Ross views a major motivation for China to preserve the value of their current holdings. (90) Thus, even if China decides to move to domestic consumption it will do it slowly. However, “[t]he major worry, and one the Chinese are certainly watching carefully, is a panicked flight from the dollar.” (91)

According to Stephen Jen of BlueGold Capital Management LLP, China may let the yuan appreciate by 5% as early as this March. (92)  Nouriel Roubini said that China will limit the yuan’s appreciation to 4% over the next 12 months. (93)  China may end the peg to the dollar as soon as the 2nd quarter, allowing a 2% one-step gain, and then let the yuan strengthen another 1% to 2% in 12 months, Roubini said. (94)

George Soros considers that the crucial point where the dollar could become irreversibly weak would be unpegging the yuan from the dollar. (95)


The United States have done almost nothing to resist long-term negative implications of the current crisis. Considering that the country won’t be able to offer any serious solution because of the weak political will the dollar is bound to face significant depreciation, or even collapse in case of a panicked speculative attack.

In light of this, finds the following long-term investment opportunities as reasonable:
* gold, silver, palladium, other commodities; (96)
* investing in less levered growing countries like China, India and Brazil, which would gradually evolve into a consumer-focused economy; (97)
* the Australian dollar, the Canadian dollar, the Norwegian Krone, the Chinese yuan, and currencies of countries with less debt and healthy banks.  (98)

Economy of the United States has all the means for recovery because it is well diversified and competitive. It encourages science, invention and positive thinking. The country is rich in resources and has a moderate climate. Its infrastructure is highly developed. It offers solid protection of property rights and contract enforcement. But before fully enjoying all these potentials it has to overcome a nasty hangover from excessive spending, encouraging debt instead of savings, and abusing its world leadership and dollar’s position as reserve currency. This will take many years to fix.


1. Lack of Confidence in the U.S. Economy and the Dollar;
2. Is Diversification Out of the Dollar Real?

This study was prepared by©

Andrey Alexandrov

The future of the dollar is the primary focus of We follow latest developments in this area and provide our readers information from reliable sources.

© 2010 Copyright FutureOfDollar- All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


  1., February 26, 2010;
  2. Bloomberg, February 26, 2010;
  3. Ibid.;
  4. Bloomberg, February 1, 2010;
  5. The New York Times, January 29, 2010;
  6. Bloomberg, October 28, 2009;
  7. Business Insider, October 29, 2009;
  8. Bloomberg, February 11, 2010;
  9. Ibid.;
  10. Jeremy J. Nalewaik, Report on the Income- and Expenditure-Side Estimates of U.S. Output Growth, March 8, 2010, Brookings Papers on Economic Activity;
  11. U.S. Department of Labor, March 5, 2010;
  12. Reuters, February 8, 2010;
  13. U.S. Department of Labor, March 5, 2010;
  14., February 23, 2010;
  15. The Beige Book, March 3, 2010;
  16. Ibid.;
  17. Market Watch, March 10, 2010;
  18. Principles of Macroeconomics by N. Gregory Mankiw, fifth edition, 2008, p. 321;
  19. Ibid.;
  20. Reuters, December 16, 2009;
  21. David Justin Ross, The Future of the Dollar and China: The Threat of Collapse and the Move Towards a New Reserve Currency, October 27, 2009, Radiant Asset Management, LLC;
  22. Ibid.;
  23. Ibid.;
  24., December 14, 2009;
  25. Ibid.;
  26. Watch the video;
  27. The Department of the Treasury,;
  28. Ibid., March 8, 2010;
  29. BBC News, March 10, 2010;
  30., March 10, 2010;
  31. Bloomberg, February 1, 2010;
  32. IMF, January 31, 2010;
  33. Federal Reserve Bank of New York, press release of March 11, 2010;
  34. Ibid.;
  35. Ibid.;
  36. Federal Open Market Committee, March 16, 2010;
  37. The Beige Book, March 3, 2010;
  38. Blanchard, Olivier (2000). Macroeconomics (2nd ed.). Prentice Hall;
  39. David Justin Ross, The Future of the Dollar and China: The Threat of Collapse and the Move Towards a New Reserve Currency, Radiant Asset Management, LLC, October 27, 2009;
  40. Ibid.;
  41. NewsMas;
  42. Bloomberg, December 30, 2009;
  43. The U.S. Federal Reserve, press releases of February 10, 2010 and of March 16, 2010;
  44. RBC TV, November 6, 2009;
  45. Bloomberg, December 31, 2009;
  46. RBC TV, November 6, 2009;
  47. Reuters, March 15, 2010;
  48. Ibid.;
  49. China Daily, news of March 16 and January 1, 2010  /  Xinhua, March 1, 2010;
  50. Bloomberg, March 15, 2010  /  Interfax, March 15, 2010;
  51. Bloomberg, October 28, 2009;
  52. Bloomberg, January 26, 2010;
  53. Ibid.;
  54. Ibid.;
  55. 9&10 News, February 16, 2010;
  56. Bloomberg, January 26, 2010;
  57. Reuters, February 19, 2010;
  58. Ibid.;
  59. Bloomberg, January 26, 2010;
  60., February 23, 2010;
  61. Joseph Stiglitz, The Three Trillion Dollar War: The Real Cost of the Iraq Conflict, book discussion, April 8, 2008;
  62. Ibid.;
  63. Ibid.;
  64. Ibid.;
  65. Joseph Stiglitz, Wall Street’s Toxic Message, July 2009, Vanity Fair;
  66. Ibid.;
  67. Ibid.;
  68. Reuters, January 31, 2010;
  69. Ibid.;
  70. Joseph Stiglitz, Wall Street’s Toxic Message, July 2009, Vanity Fair;
  71. Xinhua News Agency, December 27, 2009;
  72. The Financial Times, February 2, 2010;
  73. China Daily, February 6, 2010;
  74. The Washington Independent, February 10, 2010;
  75. China Daily, February 25, 2010;
  76. China Daily, March 3, 2010;
  77. Xinhua, February 19, 2010;
  78. The Daily Telegraph, February 10, 2010;
  79. Data provided by;
  80. Reuters, November 16, 2009;
  81. Nouriel Roubini, The unsustainability of the U.S. twin deficits, Cato Journal, The Spring-Summer, 2006;
  82. Ibid.;
  83. Ibid.;
  84. Ibid.;
  85. The Renminbi’s Dollar Peg at the Crossroads, Keynote Speech by Maurice Obstfeld, December 2007;
  86. Ibid.;
  87. Ibid.;
  88. Bloomberg, March 8, 2010;
  89. The Renminbi’s Dollar Peg at the Crossroads, Keynote Speech by Maurice Obstfeld, December 2007;
  90. David Justin Ross, The Future of the Dollar and China: The Threat of Collapse and the Move Towards a New Reserve Currency, October 27, 2009, Radiant Asset Management, LLC;
  91. Ibid.;
  92. Bloomberg, February 18, 2010;
  93. Bloomberg, March 8, 2010;
  94. Ibid.;
  95. Interfax, October 26, 2009;
  96. Jim Rogers, January 6, 2010, The Business Times, and November 25, 2009, Business Week  /  George Soros, March 1, 2010, Bloomberg  /   Saxo Bank, January 2010, RBK Magazine  /  Radiant Asset, October 27, 2009, David Justin Ross, The Future of the Dollar and China: The Threat of Collapse and the Move Towards a New Reserve Currency;
  97. Bill Gross, Investment Outlook, February 2010, PIMCO;
  98. Nomura, November 24, 2009, Bloomberg  /  Radiant Asset, October 27, 2009, David Justin Ross, The Future of the Dollar and China: The Threat of Collapse and the Move Towards a New Reserve Currency.

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