sedek

It's Time to Talk About Inflation

"Bob Shiller has estimated that the United States has never seen, in the past 150 years or so, a spike in rising housing prices as we have seen in the past eight years! And, the bubble has spilled over into commodities, especially gold and oil."

Rather than seeing a "bubble" in housing and commodities, I think it more accurate to see the values as a reflection of how far the Dollar has fallen. The once mighty Greenback is worth about a quarter of what it was in the days of $24 oil or $250 gold. All housing tried to do was keep up with the commodities, but was torpedoed by rapid rate hikes attempting to correct the Greenspan low interest rates. Things won't get better until fiscal responsibility is restored.

U.S. Dollar Paradigm Shift Underway

"Call me the optimist, even a contrarian, but selling the US short is a foolish thing to do after the proverbial toilet has already been flushed."

The flushing is ongoing, the recent Deficit Stimulus Act, liquidity injections, BSC guarantees, and last week's rate cuts still washing over us, with more rate cuts, more bailouts, and congress tripping over themselves to come up with more ways to buy our votes with the grandkids' money.

Gold is useful as a standard, a way to recognize that the Dollar has lost 3/4's of its value in under eight years whil the Euro has only lost a half. Without the commodities, we would have no reference for the incompetence of our leaders and bankers.

Saving the U.S Dollar: Wall Street's Next Big Bailout?

Interesting points, but I don't see centrals intervening in any manner other than continuing to devalue their own currencies by printing more money. The idea of Japan, China, and the oil producers buying more Dollars as their massive holdings are falling is short term, will be no better than a temporary slowdown, and will cost them more in the long run.

The only intervention that can stop the Dollar from falling further now is for the FOMC to accept that increased liquidity does not create increased counterparty trust and to not cut rates further this meeting. As a 75 bp to 100 bp cut is already priced in to the Dollar and commodities, a cut refusal would cause an immediate and major rebound in the Dollar and should take oil to $100.