Merk G10 Currencies Monetary Score

Merk Funds has recently released a white paper entitled "G10 Currencies: A Monetary Policy Analysis" where they analyzed G10 currencies and gave a "Merk Monetary Score" to each of those.

The Merk Fiscal Score and a Merk Economic Score are aggregated together with the The Merk Monetary Score into an overall Merk Currency Score

In this 7-page white paper, they explains their methodology and the Merk Monetary Policy Score eventually ranks monetary zones as follows:

1. Australia
2. Canada
3. New Zealand
4. U.S.
5. Sweden
6. Euro Area
7. Norway
8. Japan
9. UK
10. Switzerland

The best currencies in terms of monetary policy would then be the Australian dollar and the Canadian dollar and the  worst currencies the British pound and the Swiss franc.

Why is the British Pound a doomed currency ?

I previously talked about the reasons the US dollar is doomed based on my analysis. Today, I'll show why the British pound (GBP) is also doomed based on the research made by Tullett Prebon financial firm and published in their report entitled "Thinking the Unthinkable" part of Project Armageddon.

When considering public and private debt, the United Kingdom is actually one of the most indebted countries in the world as a percentage of GDP with 167% public debt (including quasi-debt obligations, but excluding potential commitments created by financial interventions) and 97% of private debt (mortgage and consumer debt) . That's 264% debt to GDP ratio.

Tullett Prebon concluded that Britain’s debts are unsupportable without sustained economic growth, and that the economy, as currently configured, is aligned against growth.

So they come to the same conclusion as Jim Rogers who famously said the "UK is finished", unless some miracles happen such as an economic growth of at least 2.9 % between 2011 until 2016.

On top of that, the UK external debt (owned by foreigner) is at an amazing 400% of GDP (or 143 000 USD per person ) far higher than in Greece, Spain or Portugal, and if foreigner decide to sell UK debt, the British pound would completely be decimated. The UK, as the US, also has a trade deficit which usually makes a currency weak.


Tullen Prebon explains that bankruptcy is a very possible outcome for the United Kingdom but the idea has not yet made its way into the public mind.

You could read the full report below.

Tullett Prebon Project Armagedon Aug 2011