The U.S. Dollar Hits a Wall

No big surprise, perhaps, but the U.S. dollar has hit a wall with respect to most other major currencies. The inflection point can be nailed pretty much spot on, as the following figure shows: September 10, 2008. Click to enlarge:

[via Pacific]

Comments

[whidbey:]

Very interesting, but not conclusive by any means. The economic effects on developing countries of the USA crisis are starting to look a one way ride down hill. The Chinese may fool me, but I think their exports will fall and the same for Japan. In the end all economies may have headed for the brick wall, and it just of matter of when they collide with the bricks. Soon in any case, but too early to make any calls. Z

2008 Sep 23 02:48 PM

[NOWHEREMAN:]

3 month LIBOR is UP again. in the past 3 weeks it is up almost 25%. The interbank lending rate suggests further tensions in the Financials.

The types of troubled assets now include the Credit Default Swap arena. These are both internal and external to the US. Which translates into a spike in US dollars floating around the rest of the world.

It will continue to be Wealth Destruction=deflation in the US but exacerbated Money supply expansion = inflation outside coming in.

IMO, the only way to defeat the internal forces at work will be to allow the Dollar to drop. I don't really know whether 61-62 will hold but it should have a profound affect on the US population by encouraging them to spend on ever increasingly higher priced items.

Right now spending has slowed and will continue to do so as long as the consumer believes Sale Prices are here to stay.

2008 Sep 24 09:05 AM

[NOWHEREMAN:]

Stocks up again on hope, 3 month LIBOR is now approaching 3.8 up from 2.8 just 3 weeks ago.

2008 Sep 25 11:11 AM