Asbytec

U.S. Dollar Still Center Stage

I haven't had my coffee yet this morning, but yes...once property prices start rising, again, they will become good investments, especially if each acre has a gold mine on it. LOL. I guess that's the idea, to induce inflation so everything offers a higher price down the road, except a savings account.

If this amero thing is real and kicks off, the loony will be rolled into it along with the Mexican peso. I don't know about you, but I cannot see the Mexican peso doing either currency any good. The loony has some good fundamentals to help an amero retain some value.

But, as for the dollar, yea, it may fluctuate downward a bit, then maybe back up. If inflation is a monetary policy, and I believe it is, then this stubborn deflation cycle should work wonders reducing the number of dollars floating around the globe. It already has, actually, despite the Fed's printing. It will also reduce the amount of other currencies, but the dollar is most plentiful and used to settle almost all contracts. It should benefit most from deflation.

Okay, coffee is here...

U.S. Dollar Still Center Stage

Al, the same pressures are apparently true for all currencies relying on US imports. Stronger currencies, less imports. (Also, less consumer credit and high unemployment, less imports.) So, exporting nations might feel the need to inflate their currency to keep export prices competitive. This is the currency war that might cause a collapse of all fiats if the US dollar fails. I assert the world's major currencies are linked through US consumption and trade and a weak dollar is not good for anyone, including the venerable euro.

U.S. Dollar Still Center Stage

Sound production and fundamentals, by the way, it appears Obama is in favor of by pushing to train scientist and engineers beginning in a better equiped public school system. For some reason, he meets with a lot of resistance to that push. It dumbfounds me, sort of.

U.S. Dollar Still Center Stage

I'd argue metals are a good investment, too. But, I am counting on deflation to revive the dollar (as it will other currencies in excess, too.) But more importantly, I am praying sound economic fundamentals will return and give the dollar meaning, again. I am not giving up on the dollar, it may be the one currency laying at the top of the heap of collapsed currencies. What hurts is the dollar carry trade, for now and for some time to come. That's scary.

U.S. Dollar Still Center Stage

Debasing the dollar to such an extent to prop up equities is a sure sign we're in a lot of trouble. When equities are not worth a given value of their own merit, putting them at 'fire sale' (dollar devalued) prices is the solution? Maybe a share in AIG will buy a big mac soon enough.

I have a fear this recovery is tenuous at best and will likely be short lived, especially with unemployment still very high and consumer credit tight. I fear our crisis is, really, far from over. I also realize I could be wrong, I am not clairvoyant, but I just don't believe we're back to sound fundamentals.

The dollar may well be doomed as a reserve currency, and SDR may be the future. If that happens, remember all currencies are fiat and all fiat currencies fail. And to some extent, all are dependent on the (doomed) dollar and will likely be affected adversely, too. Some may not even survive a dollar collapse.

So, is the euro or the pound ready to meet the challenge of playing a larger role as a reserve? Can they sustain the pending trade deficits with China and inflationary pressures as well as the dollar does, or did?

Come on deflation, work your magic on the dollar...rid us of the excessive debt and revive our propensity to save.