As the global currency war intensifies, the majority of attention has been paid to the 17% fall of the Japanese yen against the U.S. dollar over the past few months.The implosion has given cover to the sad performance of another once mighty currency: the British pound sterling.
But in many ways the travails of the pound is far more instructive to those pondering the fate of the U.S. currency.
Japan has a unique economic and demographic profile which makes it a poor stalking horse. Newly elected Prime Minister Shinzo Abe and the Bank of Japan have clearly and forcefully committed Japan to a policy of inflation at any cost.
Even in a world of serial money printers their plans stand out as exceptional. Britain, on the other hand, is charting a more conventional course to the same destination.
Limited Time Offer: To receive a free copy of Peter Schiff's new bestseller, The Real Crash, click here.
The UK government, under conservative Prime Minister David Cameron and Chancellor of the Exchequer George Osborne, has succeeded in bringing marginal discipline to their budgetary imbalances.
From 2009 to 2012, British government expenditures rose a total of just 1.6%, which was far below the official pace of inflation. (In contrast, U.S. federal spending grew by 7.9% over that time period). Since 2009 the British have kept their debt-to-GDP ratio lower than America's and have cut into that metric at a faster rate.
Four Ways to Profit From Britain's Surprising Post-Election Rebound
I have been negative on Britain for a decade - and with good reason. The British economy was over-dependent on financial services, and government spending - at greater than 50% of gross domestic product (GDP) - was out of control.
However, the new government that took office in May has prompted me to reconsider my investment viewpoint. The new coalition has made progress on both of these once-worrisome issues.
And that means the British market is now one that investors should very carefully consider.
Let me explain...
To find out about the four stocks that stand to benefit most from Britain's unexpected turnaround, please read on...
Dodge a Possible Debt Debacle With These Two Stimulus-Plan Safety Plays
U.S. President Barack Obama's $862 billion stimulus plan, passed in great haste after his inauguration, has now revealed its true costs and benefits. It didn't revive the U.S. economy - that bottomed about May 2009, before a dollar of it had been spent. Further, combined with the mad wave of similar "stimulus" outlays across the planet, it has destabilized global bond markets - which may end up being very expensive indeed.
For details of the two stimulus-plan safety plays, read on...
British General Election: Even the Winners Will be Losers
The British general election campaign reaches its climax on Thursday, and at this point appears to be anybody's game. The most likely outcome is a "hung parliament" in which no party has a majority and a government is formed through backroom haggling.
However, after looking yet again at the state of the economy in my native Britain, I'm forced to ask a simple question: Why would anybody want the job?
To find out just what the future holds for the British economy, read on...
Plummeting British Pound Leads to Worries of Another Currency Market "Black Wednesday"
Outside of the earthquake rescue efforts in Chile and the Greek-rescue efforts in Brussels, the big news in the world economy last week occurred in currencies.
As you can see in the chart below, the plummeting British pound sterling has dropped even more than the beleaguered euro in the past month and a half, while the good old U.S. dollar has been as good as gold. (That last bit was a bit of currency irony; the dollar has actually been much better than gold, which has flat-lined in the past six weeks.)