Let's Print Money, Here's How.

Axel Merk writes today about the issues in the currency markets and Greece in particular. His article today is fascinating, telling his story of what has conspired to create the problem Greece finds itself in, without doing anything differently from what it has always done. The title of his article is Greece - From Hard Money to Fool's Gold. In this article he also describes very simply a money printing scheme that helped me better understand this transaction. Turns out it is more of a concept or virtual transaction. Here is his description...

Individual Currency Charts Replace the DXY Chart

The DXY index represents a bucket of six currencies weighted as follows... the Euro 57.6%, Yen 13.6%, Sterling 11.9%, Canadian Dollar 9.1%, Swedish Krona 4.2%, and Swiss Franc 3.6%. This design was created by J.P. Morgan in 1973.

2010 Outlook from a dollar watcher

Axel Merk manages mutual funds specializing in currencies. He too has posted an article on Safe Haven to describe his analysis of the statements coming in the follow up analysis of the recent Fed Open Market Committee meetings. His article is brief and to the point. Read it here.

Axel Merk is saying what I think is most likely, assuming no unexpected financial shocks. The expected ones (CMBS, RMBS, other defaults) are still coming! And he is using his world wide perspective.

As a result, it seems that the Fed may indeed halt the massive balance sheet expansion at the end of the first quarter of 2010, but such a break is not indicative of tightening, but a pause at an extraordinarily accommodative level.

In our assessment, the Fed is continuing to ease at a time when the European Central Bank (ECB) has already withdrawn liquidity and central banks ranging from Australia to Norway have raised interest rates. It seems rather unlikely to us that the Fed will have a tighter policy than the ECB in 2010. Of course, the eurozone faces challenges in Greece, Ireland and Spain, amongst others; but the U.S. will also face substantial headwinds, for example, commercial real estate. Ultimately, the global tightening wave many market observers are predicting in 2010 may be far weaker than priced into the markets.