The hand-wringing about the US dollar is rather late to the party.
Where were all you concerned dollar bulls earlier in the decade? It strikes me that like the late-to-discover inflation, you folks cannot spot a trend until it bites you in your collective asses.
While the WSJ is upset that the dollar has been range bound between 72-87 the past 3 years, I strongly urge them to look at the 7 years before that.
Consider the following charts: The one at right was in today’s WSJ, and shows the US currency off by less than 20% over the past few years.
That’s not a dollar collapse; A fall from 121.02 in July 2001 to 70.69 in March 2008 — Now THATS a dollar collapse:
Source: Barchart.com
Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data, ability to repeat discredited memes, and lack of respect for scientific knowledge. Also, be sure to create straw men and argue against things I have neither said nor even implied. Any irrelevancies you can mention will also be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.
The 2001-2008 decline was under a Republican president, so it doesn’t count. Just ask the WSJ.
Even cab drivers understand the dynamics of central bank dollar printing making it difficult for policy makers to achieve their goals.
I think a lot of speculation is based on the dollars printed and not the dollars in circulation.
The USA is just another country. It is time to get a grip and admit it. We are not the best at everything. Even Japan is better at running up their national debt. And we are not the worst at anything either. At least Washington and its politicians are no worse than Harare or Tripoli.
BR-
“I strongly urge” you to look at the 7 yrs BEFORE 2001. This was a period of enormous USD strength.
So on 15 yrs it’s pretty flat… Slightly decline. Kinda like commodities.
Whats the easiest way out of the current economic mess for the US? Simply continue printing money and allow a hugely devalued dollar and major inflation to solve 3 problems simultaneously: 1) the further devalued dollar will allow the US to pay foreign creditors with cheap money 2) expanding the current freeze on Soc Sec COLA to all entitlements doesn’t require any political courage and allows US to meet it’s commitments with ever cheaper dollars 3)Wage inflation thanks to progressive tax rates walks everybody into higher tax collections, no new taxes are necessary. PROBLEM SOLVED by just staying the course.
Reversing the present course would be extremely difficult if not impossible for the FED, their timing needs to be nearly perfect and somebody must step in and keep buying T paper when the FED stops being 80%+ of the market. Interest rates don’t have to go up very much to offset the savings they are battling over in Congress.
By the time you realize there’s a problem it’s probably too late. That applied to GM and I think it applies to US
we are on to it..
http://www.readtheticker.com/Pages/Blog1.aspx?65tf=188_euro-approaching-another-cycle-top-2011-04
http://www.readtheticker.com/Pages/Blog1.aspx?65tf=190_this-sp500-chart-is-not-pretty-2011-04
Who owns the WSJ? Who was President 01-08?
All about politics. A deficit is a deficit the source does not matter.
There is a legitimate concern that the FED has an agenda to lower the value of the dollar. The concern isn’t where the dollar is now, which is stronger than it was in 2008, it’s where the dollar is headed. Combine that with the fact that commodity prices seem to be rising because of QE2, and the U.S. government seems to have no willingness to get it’s fiscal house in order. I can understand why people are worried about the dollar.
I’m actually a believer that there is still too much debt in the system, and the dollar will still be the best of many bad choices when deflation returns. I’m not smart enough to know when that happens.
Eric Janzen over at The http://www.ITULIP.com loaded up on gold and treasuries around 2000 and hasn’t made a trade since. As to the future, well, he hasn’t written anything since “Next Bubble or Last Hurrah?”, in February.
http://www.itulip.com/forums/showthread.php/18529-Next-Bubble-or-Last-Hurrah-Part-I-Stocks-and-houses-Eric-Janszen?p=189867
Every worker just needs to work an extra eight hour shift per week.
We can keep tax rates the same on the so-called “rich,” the truly important people in our economy, the successes, the winners, the “job creators.” They will benefit from the higher output and won’t move out of the country to a low tax regime… in other words, they can relax, more supply – Supply Side Economics! – means more revenues, and more profits!
Forget more taxes, we’ll compromise, you just need to work harder for the man.
In this regard Obama is a continuation of Bush. Both have embraced a weak dollar policy. Question is when do we wake up and realize a strong dollar contributes to lower inflation?
I believe the RMB gets added to the basket of currencies in 2014, so that may help that index better reflect what the consumer is feeling.
The USD slide may magically reverse in the middle of June in the 68-72 area when QE2 is finished.
Some technicians may look at that USD chart and see a bearish pennant that targets around the 54 USD area. However, to read this as a bearish pennant would be unorthodox in technical analysis as the pole does not really fit as a definitive and continuous formation.
Kevin Depew of Minyanville commented recently on a DeMark monthly buy set-up on the USD having completed. When I saw that and looked over the historic monthly charts it suggested a turn up in the USD anywhere from June 2011 to June 2012, although the 68 area ought to hold regardless of when the USD bottoms according to previous patterns.
Interesting interview with James West (publisher and editor of The Midas Letter) in The Gold Report, stating that there’s no gold bubble (in very frank words):
” … With the United States trapped in a cycle of fabricating vast electronic sums of debt with the virtual printing press, the mantle of legitimacy and cloak of secrecy proffered by the government’s favorite off-balance sheet entity, the U.S. Federal Reserve, guarantees the inability of the will of the people to manifest itself and break free from this pattern. The Federal Reserve has become the slave master who ensures the bondage of humanity to the foul and putrid U.S. dollar. It is now, more than ever, the enemy of the American people, and by extension, the rest of humanity. ” …
” … I think that the higher the monetary metals go, the greater their demand is in terms of capital preservation strategies. That’s because the higher they go, the stronger the correlation to and proof of an increasingly unviable dollar, thereby spurring demand. ” …
” … Governments with U.S. dollar holdings are increasingly embracing the wisdom of dumping dollars in favor of better value stores, and gold and silver certainly fit that bill. When the U.S. dollar is finally decommissioned, which it definitely will be, the replacement global trade standard must, in some way, be moderated by an official peg to the prices of gold and silver. ” …
” … I am personally of the opinion that, contrary to conventional conspiracy theory suggesting that the United States has no gold, the government is using a portion of its fabricated ersatz capital to accumulate gold and silver surreptitiously, fully cognizant of the fact that the U.S. dollar is doomed. ” …
Interview by Sally Lowder of The Gold Report 04/22/2011
http://www.theaureport.com/pub/na/9350 http://www.midasletter.com/
Now you did it!! Krugman just linked to you!! ;-)
An empire that is in decline. 2001 was the top for us.
Bush administration singlehandedly accelerated the decline of U.S empire.
One of the reasons we experienced the greatest decline during the last decade may be because we experienced the greatest strength in the dollar in the decade preceding it. What goes up must come down. Picking the highest and lowest point on a chart to make a point is called data mining and is statistically flawed.
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BR: The 10 year chart above shows peak to trough trend drop.
Wanna see cherry picking? In 1989, the Dollar Index was 106. In 2001 it was 121. Thats cherry picking — but the chart above? Not remotely close.
I would have assumed any idiot could look at that chart and recognize a downtrend. I guess I assumed wrong.
they vehemently stated they wanted a strong dollar all the way down.
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