Falling greenback distorting global asset prices

America owes the world a fortune and is actively looking for ways to reduce the level of repayment on the debt. One very effective way to reduce payments is to revalue the amount that you owe. This is most effectively achieved by changing the valuation of the currency.

American calls for a revaluation of the yuan are simply a method designed to reduce the amount payable in US dollars. A change in yuan valuation effectively reduces the amount of debt that has to be repaid by America. In this situation the borrower has a powerful voice in the media and has been able to distract attention from its own underlying problems.

The situation is further complicated by the continued fall in the value of the US dollar. This simply tells us that the world is losing confidence in the ability of the US to meet its debt obligations or cutback on its excessive spending.