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Global Interest Rates, Precious Metals the Dollar and the Euro

Listeners’ Questions, Peter’s Answers- July 7, 2011

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Michael from Chicago, IL
For those of us new to interest rates, can you please provide some currency valuation of other countries? For instance, I noticed that Australia’s interest rate is above 4%, while Italy has a negative interest rate? What does this trend mean to the global economy?

Merri from Houston, TX
If the Euro fails and there is a disorderly retreat to national currencies in Europe — and since the US is joined at the hip to Europe — what would you say will be the effect on precious metals and the dollar?

Brett from Melbourne, Australia
I’m an Australian citizen, and am wondering if you would advise against investing in American mining companies, considering a strengthening AUD relative to the USD could offset any gains made in share price?

Bob from Olten, Switzerland
In 2008 Congress passed a law allowing the Federal Reserve to pay the banks interest on certain account deposits. As a result, the money in circulation has not been increasing significantly and this has moderated inflation. Can the Fed gracefully withdraw this money by selling their T-Bills back to Treasury at a later date or will this money eventually enter circulation?

Francesco from North York, Ontario (CA)
Do you think China would ever employ the unemployed Americans on Chinese soil and pay them U.S. dollars to get rid of the American debt they own?