Dollar Soars 24 comments
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Judging by the performance of the Dollar index today, investors seem to be putting more faith in the US economy than the rest of the World. As shown below, the Dollar found a bottom on support levels early last week and has really taken off again today (currently up 2.5%). We'll take it.
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This article has 24 comments:
1) World's largest debtor nation.
2) Economy is going down the drain
3) FED has pumped out hundreds of billions in new money this past month.
4) Bank borrowing at the FED has exploded just to meet reserve requirements.
4) On the verge of borrowing another Trillion into existence once details for the bailout are revamped.
Yep. The fundamentals seems right for a big dollar rally.
Europe's banking system is not as transparent as the US and who knows, the hole in their balance sheets must be big too. At least key US figures are known to the world and -- right or wrong -- we're dealing with the crisis (we'll, at least there's a lot of talking about it).
So, to sum up, don't put too much faith in other currencies either; they're just like ours: paper money with no intrinsic value, just perception. Scary but true.
freeAgent: They will wind up printing that $700 billion and a bunch more eventually. Once the elections pass and the incumbents are back entrenched in office they will change their tune. You are right about the reaction to the failed bailout. That and the reported weakness in Europe are fuelling a rush into the dollar as a better place to be than the euro. Hardly anyone moves their money for the long term 'inevitable' any more. It's all part of the problem....now, now, now!
That's nearly a 100% increase in just 8 years!!
Every new USTreasury IOU creates an equal amount of US dollars. We've doubled the supply of created money and then put it into a fractional reserve banking system that multiplies it up to 10 to 1.
How can the dollar possibly hold its value under those conditions?
Too often people mix use of 'inflation' and relative prices vs. another currency. Just because the value of a dollar is falling slower than the euro doesn't mean it's not falling compared to tangible goods.
Hedge funds and Mutual Funds with International exposure are selling other currency related assets and converting to dollars for the redemptions occurring and about to occur. In other words the US dollar is coming home.
What happens to our vaunted International Sales figures now? Oil and International were going to prop up the Earnings of the S&P, I would hazard a guess that as earnings trickle in conversion term, they will be unimpressive at best and will be the direct opposite of the rosy outlook previously espoused. IMHO, Multiple downgrades will become the norm as the Future Earnings reality finally rears its ugly little head.
Say what you will, a strong dollar is not good for our economy.
HAHAHA. The dollar is up because all our trade rivals are united in making the dollar stronger. This is why the Treasury had to ship out epic amounts of dollars to all the other global central banks this last 48 hours.
They all want to hold US dollars so they can stimulate even more lopsided trade with the US. The US has the world's biggest trade deficit, by far and away. And is thus, central to global trade.
We cannot allow this. A strong dollar is a disaster for us. The obvious and easiest cure is to have a tax on imports to the US. This will negate these naked attempts at weakening currencies that should be strong like the yen, for example.
But the Japanese won't allow this. Nor the Chinese. The EU, China and Japan all hold collectively more than $3.5 trillion in US dollars in their FOREX reserves. For crying out loud. We now have no reserves at all.
You must not believe in Santa Claus. 85% of our toys are imported. GRINCH
The US has the best..
Infrastructure, Education system, Military, Medical Community, Energy Reserves, Technology, Shipping & Transportation system, Government, Financial system, Media & entertainments. Pick any sector you'll see the world leaders in that industry are US based companies.
Aren't these the fundamentals of our economy?
I think more people need to spend more time abroad in order to appreciate what they have at home.
Hey does anyone see what is happening. I posted not too long ago, to WATCH OUT for DECOUPLING! Remember that? Well, market is tanking, oil has been running downhill, and the dollar is (er) strong. And what is happening to gold? Its UP!!!!! Imagine that! When (not if) gold starts to really gain legs in its DECOUPLING, its Katie bar the door as far as the price of gold. It will go to four figures. The only question--What will the FIRST DIGIT BE???????
BUY gold folks! BUY IT NOW! God Bless yas!
The US also has the largest national debt on the planet. Odds of repaying that debt aren't worth considering.
When the foreign countries that own US debt collect and the FED prints even more money to pay them, you will discover that your paycheck will no longer buy all the "best" stuff we have because the US dollar will head the way of the Zimbabwe dollar.
When the rest of the world realizes that the 'safety' represented by the dollar actually means they will be paid in paper of little or no value they will stampede out of the dollar every bit as fast as they recently stampeded in.
Sure, they know they will get their dollars back but what exactly will it buy compared to what it would buy if kept in Swiss Francs, or gold, or silver?
Go look up the numbers for US gold holdings and National Debt (ie. # of dollars printed) then do the math. To fully back our dollars with gold the price would have to be over $38,000/oz.
Quite the fall from $20/oz back in 1912, eh? Back then you actually could exchange your paper for gold coin.
Cheap TVs are fun but not if they are killing our nation. NO nation in history lasts long as a sovereign power if they run vast trade deficits.
By the ECU, China, and other countries printing their money faster than Uncle Sam does his.
How many oz of gold were mined each of the past several years? I have read that the total above ground gold supply increases by less than 2% per year while it's pretty obvious that nearly all fiat currencies are being 'created' at rates much faster than that.
Just because the dollar gains on the euro doesn't mean it isn't losing value vs. real world goods. I don't know about you, but my goal isn't to collect a bunch of ink and paper. I only get those so I can trade them for real stuff.
Nearly everyone in Zimbabwe is a billionaire several times over, yet they can't afford to buy a gallon of gasoline, if they can find one to buy.
Check the price of oil in dollars vs. the price of oil in gold.
Oil has ranged from nearly $10/bbl to $150/bbl, a range of 15:1. Yet the price of oil in gold has a range more like 2 or 3:1 (due to supply & demand issues of the moment).
The vast difference in the ranges for oil price against the dollar and gold is that the dollar is losing value much faster than gold over time.
This reduces the number of dollars chasing real goods and helps keep a lid on price levels.
The dangerous flip side to that is that inflationary pressure in the US now depends on those foreign countries holding on to their dollar reserves. If Japan or China were to suddenly 'spend' all their dollar reserves it would cause a huge spike in inflation and a massive drop in the dollar on the world currency market.
Japan and China hold the financial hammer over our heads. They can cause us great misery at a moment of their choosing. Not a pleasant thought, but such are the ramifications of the "print & spend" policies.