Michael B. Krause

Is This U.S. Dollar Move the Real Thing?

A weak dollar would create an export driven economy. It is not an export driven economy right now because the dollar has been historically so strong. Send the dollar to 3.00/euro and I guarantee you there would be plenty of demand for everything manufactured in the US.

Is This U.S. Dollar Move the Real Thing?

This isn't an 'enthusiastic endorsement'. I am merely stating the facts that if the Fed is to advocate the current capital holders retain their power position, then inflation is the way to do it. To enable creative destruction (ie Fisher's WSJ interview this weekend) as an alternative, then there will be a power shift within society. Nothing the Fed nor treasury has done supports Fisher's view.

Furthermore, the impact of doing no monetary stimulus on real output is disastrous as well. We will see layoffs and unemployment of epic proportions if we do not both monetarily and fiscally stimulate. Look to early Great Depression for evidence.

On May 23 09:28 PM altaman wrote:

> Your enthusiastic endorsement of quantitative easing and high inflation
> shows your total lack of concern for the disasterous effects these
> insidious policies will have on millions of innocent americans of
> all ages and wealth levels. Have you no shame sir?

Long Term Treasury Yields Likely to Rise, Pressuring Dollar Lower

Everyone likes to be clever and say US treasury yields are going to the sky (and thus the US government is headed towards bankruptcy). Thus the massive interest in this piece.

Any article saying to buy treasury bonds right now is uninteresting, unjustified, and generally doesn't have much popular appeal.

Interesting.

Trichet, ECB Missing the Point with Crude

The European banking system is just as guilty (if not moreso) and dependent on liquidity support from their respective central banks as US counterparts. I am suggesting that 'this time around' uncoordinated rate policy is really a sloppy way of solving these inflationary tendencies.

Remember that speculative money is out of stocks and bonds, looking for a home. That $240B (or whatever the # is) is now pumping commodities.

Also considering the destruction of wealth and reigned in credit (slower velocity of money as well), I am not sure total money supply is so 'pumped' as of recent despite what shadowstats might suggest. Whatever has been sent to the system offsets the hundreds of billions of wealth that have already disappeared (or been transferred to 'subprime' assetholders).

I agree the EU should look out for itself, and it should not have to pay for US policy recklessness as well. But at the same time, my criticism focuses on two issues seperately: 1) rate policy may be ineffective versus actual coordinated world energy policy (and this should have been done a long time ago), 2) the EU is now not backing up the Fed, but they were months ago. The EU has not decoupled from the US economy, and erroneous moves have negative ramifications for them as well, despite the wave of anti-US dollar sentiment that is so popular now.

U.S. Dollar Paradigm Shift Underway

correction: low interest rates ARE not significantly ramping up money supply.

typed a little too quick.

U.S. Dollar Paradigm Shift Underway

Yes. This 'bail-out' just prevented, as Meredith Whitney of Oppenheimer speculated, a 2.5T forced unwind (imagine the cascade) of credit default swaps.

The err here is that of the masses blindly following the quants in the quest that greed guides. That, by the way, is capitalism. Judge for yourself the errors of capitalism.

As far as John's arguments of money supply: My point is that there has been a gigantic amount of monetary destruction going on. The reigning of credit is monetary destruction. When the reserve base falls (as it has due to these bank losses), the total money outstanding is significantly less. Its just like a multiplier reduction. Now even with a new risk assessment mentality, w/ banks being afraid to even loan to each other, low interest rates is not significantly ramping up money supply. Its just helping reduce a barrier of functionality in the system.

A deflationary environment provides no incentive to run a business. Why invest if your future returns on investment will not pay for your current investment? If you want gold standard, no fractional reserve, etc. then you want a socialist system. Capitalism vs. socialism is another argument for another place.

But certainly, a strong currency with little innovation is fundamentally sound from the point of view of the fact that no progress yields little in the way of health care tech advances. You're right: you won't need to worry about retirement with a gold standard currency because you won't live more than a few years past working age.

U.S. Dollar Paradigm Shift Underway

This is a great provoker ... I was wrong about the depth of the credit crisis. I'll admit that. But if you read further in the same article, I go on to say:

If $90+ oil is here to stay, we're only at the beginning of the food commodities rally. Watch corn go to $6.00/bu, soy to $13.00, and forced out wheat acres will repeat this past season's ascent to an even more ridiculous level. Then comes the more expensive to feed pigs, cattle, and resulting milk.


And to the first writer: The average middle class lives more comfortably (minus the servants) than Rockefeller did at the turn of the century. A move away from gold standard facilitated this.

To the last poster, you say:

" For those of you that say innovation has created economic "booms"...I guess there is a sucker born every day. Booms are created by the FED. "

You are getting it backwards. The flexibility of the money supply helps and does not hinder gigantic productivity and technological increases. It is the fuel to our innovative spirit in the US. Sure it leads to excesses and busts like this, but this cycle is necessary. Greed, fear and risk taking are inherent in capitalist mentality systems; a move to a system that removes the cyclical element takes away the capitalist 'oxygen' so to speak.

On the other hand, I'm in no way condoning the giant 'herd' screwup that subprime became (not just in the US scene, but the world scene). It is a story of collusion between i-bankers, ratings agencies, and blind faith into flawed statistical models. Perhaps the lesson here is everyone in finance should be required to take 4 semesters of statistics and econometrics to not function like the herd and think for themselves.

How Bad Is the Dollar's Fall?

Take a look here.. This is coming to seekingalpha - a pro-USD argument.

scriabinop23.blogspot....

Inflation's Power: The Dollar in 25 Years

these articles come out when inflation peaks. It will within these 1-2 years (hell, even months possibly).

They are an indicator ... these prices should give incentive to finally invest in supply. Additionally, they will cramp economic growth.

staflation is an interim step to deflation.