sorgmot

Jim Rogers Still Bullish on Commodities, Bearish on the Fed

The US$ is cascading downward against the Yen and should reach 50 Yen in 2012. The US$ is ending its uptick against the Euro and should hit should hit one half Euro in 2012.

There will be endless declines in the US$ against those two currencies as long as the USA governments take over all economic business decision making in the USA.

Guess who; just won World War II?

Good Luck.

George Soros Discusses the Double Jeopardy

Welcome to the big leagues where lofty opinions about national financial structures and currency exchange rates are common tea time chatter.

One might point out that that financial history can be seen as the rise and fall of monopolies, cartels, currencies, and interest rates on those currencies all within a particular nation-state. And there are many nation-states on planet Earth each questing for the well being of the human power groups within that hold winning political power.

Currency exchange rates play a big role in displaying the scores by which the winners and losers are identified.

Interest rates in USA dollar terms have been declining since 1980. The 20 year decline from 1980 to 2000 took the dollar value of all USA asset classes higher. Houses sold for more and more while the monthly payment on the house stayed the same. More debt cost the same as less debt in the prior year did. The same old bond sold for more and more as the years went by. No one defaulted. So, every one wanted to lend US dollars and foreigners were happy to sell goods in the USA, take payment in USA dollars, and hold them while their value grew. Foreigners undersold USA producers to get their hands on USA dollars. This led to some not so-so-great results on both sides of the trade. Money did not get invested in the exporting countries and Japan, for example, stagnated. All around the globe, other nations did too.

On the USA side, during the 1980 to 2000 period, there was a huge collapse in manufacture companies and jobs as other businesses in other countries undersold USA companies and took their business away. Then, as internet access expanded, service sector jobs were also taken overseas and lost in the USA as those services were under sold.

Let us not forget the Wall Street wonder kids who worked at getting foreign dollar holders and themselves more on their USA dollar money. How? By leveraging, buying existing high interest rate debt with dollars borrowed at new lower interest rate debt.

But, what happens when the 1980 to 2000 run down in USA interest rates comes to an end? It had to, unless everyone wold tolerate zero interest rates and the infinite food and asset prices caused by zero interest rates.

Now the USA is at the end of interest rate reduction. Foreigners can no longer undersell us and make gains as our interest rates keep on falling. Foreigners do not want to hold their low interest rate USA bonds because they loose value as the dollar falls. Now the game is played backwards, commodity prices go up in USA dollars, USA interest rates go up, USA asset prices fall, USA price to earnings ratios fall, house prices fall, and etc..

The bottom line is and will be for some time is that people who borrowed USA dollars to buy USA assets will be treated as USA people were treated in the 1930's.

And then in 200