Basic game theory will tell you that the first to defect will often see the greatest reward. This is, of course, a very glib interpretation of the science but in the case of currency debasement it will likely hold water.
The race to the bottom has begun! Brazil and Peru are outright buying dollars now in an attempt devalue their currencies and keep exports competitive. See this and this. Japan has now tried to do the same for the second time in a week and failed. That's okay, intervention only costs a few trillion yen each time. See this. The Swiss franc has hit all time highs vs the dollar this morning as well! See this. The currency game is getting downright horrifying. It is no wonder that gold has breached the illustrious 1300 level in the early morning trade.
The world is waking up to the fact that US dollar is becoming more and more worthless by the day. No wonder the FED is monetizing debt (printing money to buy US treasuries). No one in their right mind is going to hold US dollars with actions like these taking place every day. I said it before and I will say it again. No one can debase the good old US of A. And think about it, how else will we pay of the mountain of debt accumulated every day without a severely depressed dollar down the road.
Weak dollar leads to lack of demand for US treasuries which leads to higher interest rates to attract more buyers which makes it harder to get a loan which leads to another downswing in housing which will lead to more loss of capital which will lead to further debt accumulated to support a defunct financial system which leads to a weaker dollar. And so the circle-jerk continues...
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