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Tangent Capital Senior Managing Director James Rickards and BNY Mellon Senior Currency Strategist Michael Woolfolk on the impact of money printing and...
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Printing press around the world running at full speed with no -- and stopping anytime soon they seem like they're all doing that some say all this money burning is manipulating the currency markets are we on the brink of a currency war.
Talk about what that means joining us.
Now -- James were cards -- is tangent capital partners senior managing director.
And Michael Wolf -- he is Bank of New York Mellon's senior currency strategist gentlemen great to see you both James first you.
Let's pull back and -- before we look at specific currencies to gold is is there any currency these days they can hold value as well as gold camp.
Sure there are few would say the Australian dollar Canadian dollar Singapore dollar and Euro.
-- -- be the strongest currency start for the reason is they're not as good as gold though -- gold will be the best over time is a question about that because even the western reserve -- servicer Australia's a very strong currency.
Because there's a lot of inflows and small capital market but -- today.
Reserve bank restore -- cutting rates so -- gonna go down somewhat against gold but on a relative basis some of these currencies and do better than others obviously.
Michael -- the US dollar and how that's.
Well we're gonna see I -- a year of -- has for the US dollar the first half of the year would see continued dollar weakness.
-- have a year receive -- -- gained some ground.
Against the Euro certainly against the yen.
Well Michael what thing that scares a lot of people there's -- term call beggar thy neighbor we saw that happen at different times during her history in the twentieth century where.
One country tries to make its goods its export goods cheaper by devaluing their currency and that its neighbor will try to do the same -- LP a war back and forth.
-- eventually can lead to trade wars is there any danger that that -- happen this time.
Well I don't think that there is a danger of -- of an outbreak of a of a trade war but certainly an expansion of the current currency tensions.
The so called currency war I think will continue.
Beyond what we've seen in 2012.
It's an old saw in foreign exchange in and that is you cannot devalue your way to prosperity.
And so.
I think in terms devaluations you see.
A move back from the expansion of flexible exchange rates we've seen over the last twenty years in 2012.
I see that continuing.
In 2013.
Nationalistic.
Minded governments taking control of of their foreign exchange policy.
For their own self interest but no I I don't see this is say.
A long term shift towards.
Currency management towards six exchange rates.
-- -- have a question for you -- the Japanese yen.
Fit into all of this continues all the time because of the Bank of Japan and everything they're doing -- ease monetary policy stimulate the economy.
What are your thoughts on the end.
It's a great question Lauren had the Japanese yen is an exception to almost everything.
Also said the US US policies achieved in the dollar against all -- -- major trading partners so Taiwan Korea China.
Europe and the rest Japan is an exception for couple reasons number one they actually need the help they suffer more from Fukushima.
The earthquake and tsunami in the -- and people realize that they need some help number two they have nothing has gone for the more -- demographics are dead GGP -- center.
But the other reasons they've now become the buyer of last resort of treasuries you know that used to be China's job but -- reducing its.
Net purchasing treasuries and actually she knows Japan is increase in -- so.
The Fed's kind of cutting Japan race -- -- what you achieved against the dollars and as you buy our treasuries were for everyone else.
-- -- -- -- Martha said you know you can't evaluate to prosperity I agree with that that doesn't mean that people won't try they sort of forget the lessons of history and they're trying as hard as they can well Jim.
What it was let's go closer to home what about the Euro.
A lot of people a year ago saying the Euro was ready for -- big devaluation but it seems to be holding its own right now now.
Yet they question comes as no surprise have a -- well over a year that -- -- stronger and stronger are continuing that nobody is leaving the Euro nobody is getting kicked out to actually have some members overtime.
The couple reasons for a number one US is out to -- the dollar these its neighbor across rates is to currencies.
Cannot -- been against each other the same time so we're gonna have achieved our you're gonna have a stronger your bureau that's the easy part.
But the other part is Chinese capital is dying to -- Europe because China wants to get out of dollars dollar buying gold distress they can we know that.
Doesn't wanna invest in -- -- they wanted to see the Europeans get their act together well guess what.
Europeans do have their act together now the Chinese capital's -- to -- that's and other support for the year.
-- -- -- saying that Europe is doing everything right.
Here's the only group is doing everything right -- Why is Angela -- -- on the -- understands economics positions non economist she's a physicist sure she understands how these systems work.
But -- Europe is is Europe has got a lot of -- -- so called austerity right now the direction making the structural adjustment they need.
US and China are in denial about their structural adjustment so -- The little while later and although although -- -- a lot of -- -- say you know raising taxes is not the way to balance your books and of course Spain seems to be proof of that because they -- or value added tax a lot.
And they're still not growing at all.
Just I just wonder if you pull back to the old.
That it next to gold I think the safest currency in the world is the Swiss franc is that still -- -- No it's not still buying necessarily mean at what we've seen the last several weeks has been a rally in the euros Swiss cross and he has surprised a lot of people.
Buy -- as the dollar and the the yen.
Have weakened.
So has the Swiss franc although and of the delayed basis that there there's been in the foreign exchange market.
Billy selloff in the safe haven currencies as we've seen the January effect really -- a tail wind here much like what we saw last year.
While if there's no safety and a Swiss franc where is safety thank you gentlemen good to see you both change your cards and Michael Wolf folk.
