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Monday, August 17, 2009
6:15 PM TweetThis
  • Elliott Wave's Robert Prechter on the dollar: "If these markets continue to be contra-cyclical, as I think they will be, you're going to see a rising dollar for quite a period of time." (video, 6:36)
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This news story has 16 comments:

  •  
    Too much debt, too few dollars. Not gonna happen, too many politically connected debtors. Let a thousand helicopters fly.
    Aug 17 06:34 PM | Link | Reply
  •  
    Cue the inflationistas crowing about how Prechter "has always been wrong wrong wrong!" in 3 . . . 2 . . .1
    Aug 17 06:36 PM | Link | Reply
  •  
    charts, stats, waves, cycles etc.....all of limited use except to "validate" when something does happen.......these are novel sets of circumstances and we should be extremely wary of "theories". Current fundamentals look pretty bearish for the dollar, and anyway, a rising dollar is a crimp on recovery.
    Aug 17 06:46 PM | Link | Reply
  •  
    Well thats just it.
    It is the unspoken policy of our government to keep the dollar as weak as possible. Why?
    All of our major corporations rely on a weak dollar to boost their bottom lines. They in turn "give" millions if not billions of dollars to Washington for favors.
    Like it or not that is the way it is.
    The dollar will have it's moments of strength, but overall, it a currency that will manipulated downward to fatten the bottom lines of those companies who truly own and control America.

    compdivplan.com
    Aug 17 08:27 PM | Link | Reply
  •  
    there were only 3% bulls the day Prechter correctly called the dollar's rebound. seems pretty clear, there were no more sellers to be had, the buck had to bounce. Good technical call.
    Aug 17 08:44 PM | Link | Reply
  •  
    Darkpool I agree with the crimp in the recovery. I was not an economics major in college but I did pass through the class. That 's exactly what I was taught. When the dollar is weak, American goods become less expensive and foreign goods become more expensive. That of course favors production here in the US. A big negative is it makes foreign oil more expensive. But, everyone is always whinning about why we aren't producing our own oil. So, the weak dollar would make production or our domestic supplies more attractive. My lone dissenting opinion on that is. Let's suck them dry and save what little reserves we have left for emergencies or something. Or at the very least, they'll be in the same boat we are.
    Aug 17 09:03 PM | Link | Reply
  •  
    You've got it backwards. It's the policy of our government to keep the dollar as "strong" as possible, but a strong dollar is one of the causes for the destruction of our manufacturing sector. A weak dollar would actually make more sense, but the idiots in Washington like the word "strong" and blindly pursue a "strong Dollar" policy despite the fact that it makes little sense for us.

    In truth, it's silly that this is an issue at all, and it emphasizes the need for an international currency backed by a hard commodity. Until we have that, countries like China will manipulate their currency to boost exports and countries like the Japan and US will suffer on the basis of having a "strong currency".

    On Aug 17 08:27 PM Archman Investor wrote:

    > Well thats just it.
    > It is the unspoken policy of our government to keep the dollar as
    > weak as possible. Why?
    > All of our major corporations rely on a weak dollar to boost their
    > bottom lines. They in turn "give" millions if not billions of dollars
    > to Washington for favors.
    > Like it or not that is the way it is.
    > The dollar will have it's moments of strength, but overall, it a
    > currency that will manipulated downward to fatten the bottom lines
    > of those companies who truly own and control America.
    >
    > compdivplan.com
    Aug 17 09:40 PM | Link | Reply
  •  
    I cannot believe this! I am actually reading a conversation about the dollar that makes sense. All of the Austrians must be asleep already or something??
    Aug 17 10:08 PM | Link | Reply
  •  
    I think his third Elliot wave will be swallowed by a Kondratieff super-cycle that will have Fibonacci number 666 predicted by Nostradamus in the Bible that will look like long-legged Japanese Doji candlestick.
    Aug 17 10:42 PM | Link | Reply
  •  
    The U.S. talks a strong dollar to gin up support for treasuries from our trading partners but they're not buying it anymore. We have gone to the well too often and it's time to pay the piper.
    Aug 17 11:00 PM | Link | Reply
  •  
    Bad debt and credit contraction is deflationary. Unemployment is deflationary. Decreased consumer spending is deflationary. Increased savings is deflationary. Falling housing prices is deflationary.

    You would think 0% interest rates would be inflationary, but the Japanese experience suggests not necessarily. As much fun as inflation is, with rising asset prices and rising interest rates, there has to be demand outstripping supply. Right now, not so much.

    I think the best way to evaluate the dollar is with each cross individually. I'm not sure the dollar index, per se, is as profitable a trade.
    Aug 17 11:07 PM | Link | Reply
  •  
    It's great entertainment when cyclical commentators make predictions that ignore a mountain of fundamental evidence. There's no way the dollar can strengthen as ong as the Fed prints money with wild abandon.
    Aug 18 04:31 AM | Link | Reply
  •  
    No one is probably following this anymore, but I am glad one Austrian awoke from his slumber. Helloooooo Anthony! I got one question for you.

    What happens if I print a quadrillion dollars and bury it under a rock, because that's effectively what the Fed did. It printed a bunch of money. Gave it to banks. But the banks aren't lending. Its just there to ensure confidence in the system. That money will never see the light of day and just like money can be created in a fiat system it can also be destroyed if inflation every props its ugly head up.

    But there is no danger of inflation for at least a decade. You talk about a mountain of fundamental evidence. Your only evidence is your belief that the Fed has printed a ton of money. While in fact, the deflationary evidence is much more mountainous. As Dr. O. wrote above you,

    "Bad debt and credit contraction is deflationary. Unemployment is deflationary. Decreased consumer spending is deflationary. Increased savings is deflationary. Falling housing prices is deflationary. "

    You don't understand inflation. You are not alone. But I suggest you learn a little bit about it. Here is a hint, printing money does not necessarily create inflation. In fact, I am sure Bernanke wishes it was that easy.
    Aug 18 01:25 PM | Link | Reply
  •  
    It seems that global central bankers are unable to create credit faster than defaults on exisiting debt are contracting. Along with Dr. O's fundamental headwinds, this is sufficient to produce disinflation and/or deflation.

    Most of the 'money' in the global economy is credit, not currency. Printing cash has not had the "Weimar" effect, and won't for some time, at least, not till we hit bottom. When that happens, few will be contesting the fact, or guessing whether or not the bottom has been reached.
    Aug 18 01:51 PM | Link | Reply
  •  
    WRONG Anthony....the Feds can (should) print as many dollars as needed to replace all the dollars lost through the credit crisis. The destruction of those dollars (through "toxic debt" writeoffs, housing price declines, unemployed workers, etc just as described by Dr. O above) creates deflation, the replacement of those dollars neutralizes that deflation and gets us back to equilibrium. If the dollars are printed that exceed those lost (or if asset prices catch a bid as the economy recovers) and resultant gross demand exceeds gross supply, THAT will create inflation. But as the Fed has already said, it can take dollars out of the system as the economy reaches equilibrium.

    this is the part of the equation that the Goldbugs / dollar bears, always miss (or conveniently ignore)



    On Aug 18 04:31 AM Anthony Alfidi wrote:

    > It's great entertainment when cyclical commentators make predictions
    > that ignore a mountain of fundamental evidence. There's no way the
    > dollar can strengthen as ong as the Fed prints money with wild abandon.
    Aug 19 07:43 PM | Link | Reply
  •  
    Puradavid....once again you make great sense. It is refreshing to have a little "Monetarist" / Minsky company here on Seeking Alpha. Machiavelli999 should also spend more time here battling the Doomsdayers
    Aug 19 07:47 PM | Link | Reply
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