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The Song Remains The Same

It seems like Groundhog day as the U.S. Dollar Index declines again after staging an overnight rally. The U.S. Dollar Index climbed to $77.65 around 4:00 am EST and then began its steady decline lower. This used to happen quite a bit in February and March of 2010 as the stock market surged to a new 52 week high. Iit looks as if the same play book is being used again by the Fed.

Despite recent media attention about the falling U.S. Dollar Index, the stock market seems to love the weak U.S. Dollar. Spot crude is now trading above the $83.00 level. Remember high oil is a direct tax on the U.S. consumer which accounts for 70.0 percent of the GDP in the United States. Many people are wondering what the price of heating oil will cost this year as the winter season approaches. This is another added expense on the already taxed U.S. consumer. Higher commodity prices are good for floating the stock market higher, however, they are not beneficial to the average person that needs to buy staple items for survival. While food and energy might be excluded from the economic reports they are certainly not excluded for the everyday person.

At what cost will this blatant decline of the U.S. Dollar Index be addressed? While the powers that be may think it is good in the short term they should seriously examine the effects of it in the long term. I have said it before and I will say it again, this will not end pretty. Enjoy the music while it is playing, because when it stops there will be a major price to pay.