DRumsfeld

Artificial U.S. Dollar Rally Is Coming to an End

Nobody knows what is happening and that is why we are having these wild forex swings. My bet is that the Dollar will severely decline in 2009 once the true crises in the USA is realised and people realise that Obama cannot fix it. Obama's plan is to spend spend spend and this means borrow borrow borrow. It is unrealsistic that the Bond market can survive the coming blitz of money demand. Expect monetisation and a falling Dollar.

The Euro will be under pressure, but the major economies have high savings rates and do not have to print money to afford priming the economies. A big and substantial difference. The US has negative savings (Govt and private), massive debt and a severe and worsening economy. The US also needs to borrow over $2.5bn a day right now just to stay afloat. Seems unrealsistic for this continue with interest rates at zero.

Week in Review: Dollar's Biggest Advance Vs. Euro in 3 Years

The only post here which shows someone with economic knowlege is SWRichmond.

Look at this:- patrick.net/housing/co...

Bernanke is talking the talk but he will not walk the walk. The markets in the short term will let the Dollar rise as they want to trade and make money. But in the Autumn they will test his resolve and he will not be able to raise interest rates enough without killing the financial and housing markets.

Bernanke has stated that he will do everything to prevent deflation. Raising interest by more than 0.25%(very unlikely) is not going to happen. The Dollar is going to fall a lot lot further. As for oil, this will continue to rise. Who is going to win -the markets or the Fed: no contest, the markets.