Axel Merk: Get out of the dollar

Axel Merk is the president of Merk funds, which specializes in currencies.  He is going out there saying that the dollar will fall due to QE2 (that sounds familiar).  Merk has been spot on with many of his previous calls. Mr. Merk predicted the credit crisis as early as 2005.  In early 2007, Mr. Merk warned volatility would surge and cause a painful global credit contraction affecting all asset classes. Via Merk Funds
The Fed is on a 'very dangerous path,' says Axel Merk, president of Merk Mutual Funds. 'The best case we can get is inflationary growth, but the downside risks are very high. [Bernanke] thinks a weaker dollar is going to stimulate the economy. Let's hope it's only a gradual decline, not a crash.'

'I think he [Bernanke] is dead wrong. The reason is the damage he is creating with quantitative easing far outweighs the potential benefit.'
"It's with the best of intentions but I think it's [QE2] a very, very wrong policy," Merk said in an interview.  "There's no such thing anymore as a safe asset. Cash is no longer safe," he said. "Do what central banks do, they diversify to baskets of currencies."

Consumers should prepare for another turn of events like the spring of 2008, when oil prices soared to $147 a barrel and gas at the pump was more than $4 a gallon, he said.

"One of the key things here is a weaker dollar has traditionally not been inflationary because Asian exporters like to absorb the higher cost of doing business," Merk said. "There comes a breaking point when Asian exporters can no longer absorb that higher cost of doing business. They'll raise prices and guess what? They will stick.

"So we will have a cost-push inflation. We're going to get inflation but not where Bernanke wants to have it. We're not going to get wages to go up. We'll get the price at the gas pump to go up instead."
"We won't be like Japan because we finance our deficits externally. So our fate will be different," he said. "We'll have a dollar that may crash in that process. The issue here is that (Fed Chairman Ben) Bernanke wants to have a weaker dollar. This is the first Fed chairman who is seeking to have a dialogue about the dollar."

Merk on Nov 3 via Yahoo

Merk on Nov 4 via CNBC


Axel Merk Bio
The Fed's plan in plain English
The Fed devaluing dollar to help economy


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