Although many analysts are touting the U.S. dollar as a “safe haven” for investors compared to the euro thanks to the debt crisis in Greece and other European countries, Axel Merk of Merk Investments disagrees[1]. Merk recommended in a report he released earlier this week that investors “take a closer look at their dollar holdings” to make sure that they are still at a level of risk that investors find acceptable. Merk says that the euro has actually been rallying against the dollar thanks to unbridled printing in the U.S. “Less money is being spent and printed in Europe than in the U.S.,” he explained. Furthermore, he even accuses the Federal Reserve of possibly “actively working to weaken the dollar in order to spur economic growth.” Merk says that Federal Reserve board chairman Ben Bernanke is already doing this “in both deed and action,” and points out that countries that “don’t actively debase their currency may end up with a lot of pain, and less economic growth, but potentially a very strong currency.”
Do you agree with Merk, or do you think that the dollar still represents a “safe haven” for investment?
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[1] http://www.bankinvestmentconsultant.com/news/dollar-euro-currency-value-international-markets-debt-crisis-2673913-1.html?
No, not in the long term. Shot term, maybe at times, but when the word get out that the US is needing to fund 10 trillion dollars in short term debt in the next 4 years, Who will buy all those treasury notes? that will at least double the number of notes now, and the Fed bought 70% of treasury notes this year, Who will buy now?