Countries Fighting Collapsing Dollar Value

A number of countries around the world are acquiring larger positions in the U.S. dollar in hopes it'll help shore up the plummenting value of the greenback to the detriment of their exports.

The most recent countries snatching up the dollar are Russia, South Korea, the Philippines and Thailand. The 15-month low of the U.S. dollar continues to raise concerns on slowing down any economic recovery because of exports from the countries having strong domestic U.S. competition because of the dollar's weakness.

Countries like Taiwan an Brazil are also concerned about the strength of their currencies against the dollar, and in the case of Taiwan they've now forbidden foreign investors from placing time deposits in the country in hopes of weakening their own currency. Comments from official in Brazil also imply there could be more action on taking steps to weaken the real.

In spite of rhetoric from Washington that they support a strong U.S. dollar, no steps have been taken to make that happen, and so it seems that's a direct nod to U.S. manufactures and unions who had backed Obama's presidential run. Exports from the U.S. increase when the U.S. dollar declines in value.

For now, China doesn't care whether the dollar rises or falls against the yuan because it's pegged to rise or fall against the dollar, keeping it at an even keel. Other countries have been pressuring China to allow the yuan to rise in value as Chinese exports also benefit from a weaker dollar as far as when competing against non-American exports.

With that in mind, there's no incentive for China to change its monetary policy, even though regional competitors complain about it. We might see some carrots thrown out to manage some of the complaints, but other than that, I don't see China making any drastic changes to their current monetary policy any time soon.

China holds all the cards in this economic battle, as if too much pressure is put on them, they could keep the import of goods from those particular nations at a small level, a major concern with the huge population in China and a solid, emerging middle class which will resume spending once the global economy rebounds.

Consequently, individual nations will have to take their own steps to make their currencies competitive, and not mistakenly wait around for some type of move by China.

For the U.S. dollar, it almost assuredly will continue to fall in value, making it even harder for other nations to compete on the international stage and with China for U.S. imports. Other nations as well are concerned, as the Euro continues to strengthen against the dollar, also making it harder for European nations to increase exports to the U.S.

Central Banks Fleeing U.S. Dollar

Banks are fleeing the U.S. dollar at an unprecedented rate as 63 percent of new cash is going into the euro and yen rather than the dollar over the last three months.

A decade ago the U.S. dollar accounted for about 66 percent of investment for the new cash in banks, while today it stands at only 37 percent.

Overall the greenback is only 62 percent of the currency reserve at central banks, the lowest level ever that has been recorded, according to the International Monetary Fund.

The obvious reason is it's losing it's value at an unprecedented rate, as it's down 10 percent over the last 90 days alone, generating interest in abandoning the U.S. dollar as the reserve currency and looking at alternatives, although that would take time to happen.

In the short term, money will continue to flow away from the dollar as the extraordinary run of the printing presses of the Federal Reserve and the outrageous Obama administration bailouts continue to hammer the U.S. dollar into the ground.

Government, central banks and investors are getting more concerned about the U.S. dollar going forward, as the almost non-existent return isn't worth the money they've invested in it to cover the growing U.S. government debt.

"He's (Bernanke) in a crisis worse than the meltdown ever was," said Peter Schiff, president of Euro Pacific Capital. "I fear that he could be the Fed chairman who brought down the whole thing."

With the horrific decision by the Obama administration to bail out everything, it has left no viable options on the table, because if the Federal Reserve raises interest rates, it'll smother any economic growth and clobber the housing market, which would slump back into a horrid situation it hasn't even escaped at this time.

On the other hand if he keeps things like they are, inflation could go as high as into the triple digits, collapsing the economy into something we would no longer recognize.

As Schiff and others have rightly concluded, "The stimulus is what's toxic -- we're poisoning ourselves and the global economy with it." Unfortunately no one that has power to make monetary decisions has the political and personal will to step in and stop the monetary madness of the Obama administration and the Federal Reserve.

Jim Rogers: Bond Bubble Burst

Basing his assertion upon unsustainable borrowing, Jim Rogers said that the next bubble to burst will be the U.S. government bond market. Rogers added in a recent interview that equities are sure to experience correction as well, after six months of going straight up.

"The next bubble that I see developing is in the United States government bond market. It is inconceivable to me that anybody would lend money to the U.S. government for 30 years in U.S. dollars at 3 to 6 percent interest rate," he said.

"So, somewhere along the line, this bubble is going to pop. If any of you own bonds, I'd be terribly worried, I would think about getting out of the bond."

As far as equities, while Rogers expects a correction, he isn't selling equities short, and the market could possibly continue going up. His idea is it's a probability that the market could go through a period of correction.

Rogers continues to be bullish on commodities, and he favors oil, precious metals and agriculture at this time.

Asia Intervenes - Props Up Dollar

Central banks in Asia moved into the currency markets in order to stop the strengthening of their currencies against the U.S. dollar in order to keep their manufacturing sector from faltering as their exports slow down.

From the middle of 2005, China has allowed the renminbi to appreciate against the U.S. dollar by about 20 percent, but now has re-pegged the currency with the U.S. dollar to also protect their exports against slowing down, thus the response by the other Asian countries to strengthen their currencies in order to counter China's move.

Among Asian central banks buying U.S. dollars were Hong Kong, Singapore, Taiwan, Thailand and Malaysia.

While some fear the move violated the recent agreement of the Group of 20 to work on a more balanced global economic growth, most traders seem to feel that this is an effort to control the pace of the weakening U.S. dollar, rather than attempt to artificially prop it up.

Jim Rogers: Dollar May Rally

While Jim Rogers has no faith in the U.S. dollar in the long term, and expects it to be replaced some time as the world's reserve currency, at the same time he's holding on to his dollars at this time because everyone understands the weakness and poor future outlook of the dollar, and have priced it into it, and so that could set things up for a rally, that while not sustainable, could make some money for investors fairly quickly.

So Jim Rogers is holding his U.S. dollars in order to offload his dollar holdings if and when a rally starts.

Rogers added that the bull market in U.S. bonds is winding down, and equities will go nowhere overall over the next 10 years or so, and will largely move sideways.

Dollar Index Slides to Lowest in 14 Months

The Dollar Index has fallen to its lowest level since August 2008, dropping to 75.767. The Dollar Index measures the U.S. dollar against the Canadian dollar, Swedish krona, Swiss franc, yen, pound and euro.

Low interest rates and U.S. dollar value have investors treating the greenback as a carry trade, and are selling of their dollars in order to get better returns on higher-yielding currencies.

While the U.S. asserts they want a strong dollar, their practices contradict that assertion, and foreign countries are concerned over their own manufacturing bases which are dependent on a stronger dollar to sell goods in the U.S. at a decent profit.

Of course U.S. manufacturers would like a weak dollar to continue, as that would help prop up the industry; strengthening it and eventually creating more jobs, while also shrinking trade deficits.

Collapsing US Dollar Driving Gold Prices

The continuing weakness and collapse of the U.S. dollar is driving gold prices as much as anything else, as in terms of the U.S. dollar, gold broke an all time record again, reaching $1,500 a troy ounce, as investors ignore the plunging jewelry demand from India and other nations and look toward safety and an inflation hedge.

To get a grasp of how weak the U.S dollar is, in other currencies gold is far from breaking records, as in being measured by the yen it's 15 percent below their all time record in gold, and the Australian dollar is even stronger, being 30 percent away from their all-time high for gold prices as measured by their currency. Even against sterling gold is 6 percent away from record past highs.

Again, gold is being moved by the increasing lack of faith in the U.S. dollar, along with complete uncertainty on the condition of the economy, as mixed signals and postive thinking reports from the government continue to hide the real condition of the global and U.S. economy, which is probably much worse than being reported.

The response to the U.S. dollar shows investors believe this completely.

Will Weak Dollar Destroy Wal-Mart?

Peter Schiff made an interesting correlation between the weak U.S dollar, the Chinese and the future of Wal-Mart (NYSE:WMT).

Schiff asserts that the days of Wal-Mart being able to buy up cheap products from the Chinese like they've done in the past are over, he even said Wal-Mart could become the next Saks Fifth Avenue, meaning their prices will only rise, taking away their unique competitive advantage.

Of course if that were to become a reality, Wal-Mart would struggle, so would their competitors who rely on Chinese products as well.

Wal-Mart could of course go to other countries providing cheaper prices like China currently does and take advantage of that, but it would take a lot of workers to make up the difference, seeming to imply they would have to enlist a number of countries to meet the low price demand behind the reason people shop Wal-Mart in the first place.

If Wal-Marts' competitors are better positioned than they are in getting their products from other countries, then this really could make things interesting, and bring the price differences between them and their competitors much closer.

Maybe this one of the reasons Wal-Mart has been working hard at attempting to bring in higher end clothing to the stores, other than attempting to reach people at higher income levels.

U.S. Dollar Still Under Pressure

As some foreign currencies respond to their own pressures and result in raising of interest rates, the decision by the Federal Reserve to hold its rates down will continue to put downward pressure on the collapsing U.S. dollar, as the Fed holds to its loose monetary policy.

Other growing factors of concern for the dollar are the increasing number of countries calling for either a new reserve currency, basket of reserve currencies, or to trade in targeted sectors like oil not using the dollar as the currency used for trade.

That will also continue pushing the price of gold up as investors migrate to the yellow metal to hedge against the inevitable inflation coming, and which some say is largely understated by the U.S. government.

UN: New Global Reserve Currency

U.S. Dollar Reserve Currency

Saying that the U.S. dollar as the global reserve currency has empowered America to build up their huge trade deficit, UN undersecretary-general for economic and social affairs, Sha Zukang, said "Greater use of a truly global reserve currency, such as the IMF's special drawing rights (SDRs), enables the seigniorage gained to be deployed for development purposes."

Zukank added, "Important progress in managing imbalances can be made by reducing the reserve currency country's 'privilege' to run external deficits in order to provide international liquidity."

SDRs are used for IMF transactions, and currently base their value on a basket of four currencies: the U.S. dollar, pound, yen and euro.

There is mounting pressure for the U.S. dollar to play a lesser role as the reserve currency of choice around the world, and a number of talks have gone on on how to go about that.

U.S. Dollar Reserve Currency

Oil Trading with U.S. Dollars? Not for long!

A number of nations have been getting together and discussing using a basket of currencies in place of the U.S. dollar to trade oil with one another.

Along with some Arab states, also participating in talks to stop using the U.S. dollar for trading oil are France, Russia Japan Brazil and China.

Evidently the deadline for all of this to transpire is 2018.

While publicly a number of countries and U.S. officials have talked about the importance of a strong U.S. dollar, that has largely become a joke privately, and we'll continually see a private push to move away from the U.S. dollar with the failed policies of the Obama administration, along with the continued actions and practices of the Federal Reserve.

This is why Ron Paul and so many others are moving so strongly to audit the Fed, and Paul's case - eventually end it altogether.

The U.S. dollar is collapsing all around us, and so-called financial experts, in many cases, continue to act as if it has a long life ahead. It may have, but it's going to continue to be on a respirator as its buying power continues to weaken.

We'll get some occasional spurts and upward movement of the dollar, as nothing falls straight off the cliff, but it will continually fall in strength endlessly unless our policies concerning the U.S. dollar change.

From the looks of it, very few have the will to make that decision, and so we'll go on until the pain of it forces the decision to be made. Hopefully by that time it won't be too late.

Jim Rogers: Inflation Going Higher

U.S. Dollar Inflation

In a recent interview, Jim Rogers said that the U.S. government is lying about inflation, and that the current rate is probably more around six to seven percent, in contrast to what is being asserted.

Rogers simply points to the obvious, that when you go out shopping, the prices are definitely higher, and obviously that can't be spun by the government.

The best play going forward, according to Jim Rogers is to invest in gold and commodities, as raw materials will outperform other assets in the future.

U.S. Dollar Inflation

Jim Rogers: Dollar Collapse Long-term

Most people that understand the cause and effect of the disastrous policies of the Obama administration and how it will continue to damage the U.S. dollar, are rightly very pessimistic about its long term future.

But because people run in packs and follow the crowd, and most at this time see the U.S. dollar as a disaster, over the short term it wouldn't be a surprise to see it rally, and Jim Rogers concurs with that assessment, saying many investors have sold the dollar short, so that could result in a short term rally, which while not being a true measure of the U.S. dollar strength, would benefit those on the right side of the trade.

Even so, over the long term Jim Rogers continues to believe the U.S. dollar will remain a disaster and will continue to collapse.

Long term there is no doubt about the U.S. dollar continuing to lose its value. But there will be times when the dollar will temporarily shoot up in response to the ongoing negative feeling toward it, so it's something to keep in mind when making your plays on the dollar.

Timothy Geithner Wants Strong Dollar?

The idea that U.S. Treasury Secretary Timothy Geithner said a strong U.S. dollar was important to the U.S. would be hilarious if it wasn't so pathetic and damaging.

Geithner's boss Barack Obama and the Federal Reserve have done everything they can to continually debase and destroy the value of the U.S. dollar, and they still aren't stopping printing money as Geithner speaks out of one side of his mouth, while giving orders to spend more money on the other.

We don't have to believe Geithner, who pleaded that we have to "recognize" that he means it. All we have to do is watch his actions, the Federal Reserves actions, and the horrendous policies of Barack Obama to know the U.S. dollar is in one of the biggest crisis of its existence, and absolutely nothing is being done to correct that except nonsensical talk from people like Geithner, while they continue in the same practices they always have. which led us to this economic crisis in the first place.

This year an extraordinary record-breaking deficit of about $1.8 trillion will be experienced by the U.S.

None of us should listen to anything politicians say about the U.S. dollar, with the exception of Ron Paul, as the rest are either clueless or outright dishonest as to what they've allowed the secretive and renegade Federal Reserve to do. Just watch and observe what is being done while you block out the talk. That's the only way to get the reality of what's happening, and not the fiction being asserted.

Hopefully the bill to audit the Fed will go through. At that time we'll see what it is they've been fighting to keep from having to disclose. They're worried. They should be!

U.S Dollar Collapse

Peter Schiff: Carry Trade Dollar

Peter Schiff has been making the rounds lately and talking about the continuing collapse of the U.S. dollar, which will make it an ideal carry trade candidate going forward, and which will make many people very wealthy as a result.

Schiff has also said that he has no idea when, or even if, the U.S. dollar will strengthen any time soon. Of course that can't be counted on at all with the ongoing spending spree of the Federal Reserve and U.S. government.

Schiff is of course the president of Euro Pacific Capital, an investment firm he runs.

Peter Schiff - Collapsing U.S. Dollar

U.S. Dollar Losing Global Favor

World Bank president Robert Zoellick said recently that the U.S. can no longer assume its position as the economic superpower will remain unchallenged, and that the days of the U.S. dollar being the preferred global currency are coming to an end.

Zoellick also stated that it would be a mistake to think that the dollar be the major reserve currency in the world as well. Other currencies expected to gain more favor and global acceptance are the Chinese renminbi and the euro.

In other words in the mid-term future there will be more options as the U.S. dollar continues to be battered under the misguided policies of the Obama administration and the Federal Reserve printing press.

In remarks considered unusual for a World Bank president, Zoeller also criticized the Obama administration for attempts to make the Federal Reserve even more powerful, while saying the Treasury Department should be vested with more power because of the oversight Congress now has over it, which at this time the Federal Reserve doesn't have.

The U.S. Dollar is the New Peso Not the New Yen Says Peter Schiff

In a recent converversation about the collapse of the U.S. dollar, Peter Schiff stated that the Federal Reserve is facing a dilemna that they'll have to make a decisions about, neither one which looks like it'll end in a good way for the U.S. dollar.

The first one is to continue on with close to zero interest rates where inexpensive dollars are the endless supply for carry traders, or they could stop the carry trade in its tracks by raising interest rates, which would cause a deeper recession "than anything we’ve experienced so far.”

Schiff added that the use of the yen for carry trade is now over, and it should continue strengthening, as the Japanese consider it a good move for their domestic economy for it to strengthen rather than be weak with low interest rates connected to it any longer.

When asked about the future of the U.S. dollar and carry trade, Schiff responed in a CNBC interview, “I don’t know when [the dollar] is going to strengthen. The dollar isn’t the new yen, it’s unfortunately the new peso.

Either way, as far as making money on the carry trade, Schiff said that because the U.S. dollar will continue to collapse, those using it to invest in higher yielding currencies and assets should make a fortune for some time to come.

US Dollar Play | Invest in Commodities

One of the more obvious play with the U.S. dollar is to invest in commodities. That can be done through futures, funds and stocks linked to raw materials.

A commodity index fund is another great way to invest in commodities over the long haul, which will continue their bull run overall once the demand for infrastructure materials resume from countries and companies spending more money.

No matter what happens to the U.S. dollar though, which will obviously continue to lose its value, commodities will continue to rise based on the demand from growing middle classes in emerging markets.

So while commodities are a great play against the weakening U.S. dollar, they are also a terrific plays in and of themselves based on demand and supply; along with tight credit markets.

US Dollar Play | US Multinationals

Many investors concerned over the unknown risks of investing outside the U.S. instead will focus on U.S. multinational companies which have a significant percentage of their business outside the U.S.

Some large institutions are looking for U.S. multinationals that do over 50 percent of their business outside the U.S. which are large and obvious companies like General Electrice (GE) and Waters Corp. (WAT), among many others.

What should be looked for is companies with history and proven track records, most of which have been performing pretty well considering the difficult economic circumstances we're in.

Invest in Emerging Market Global Bonds Against Weak Dollar

We've been talking about ways to take advantage of the weakening U.S. dollar, and another one of those ways is through investing in global bonds, whereby retail investors can invest through mutual funds.

One thing to keep in mind here is to watch for mutual funds whose currency is denominated in U.S. dollars, and of course have been rising against it.

Over the last five years, according to Barclays Capital Global Aggregate bond index, global bonds have returned 6.11 percent on an annual basis; far better than the S&P 500 and U.S bonds.

In 2009, global bonds have been performing much better than even the last five years, depending of course on which ones you invest in.

Investing in ETFs to Take Advantage of Weak US Dollar

With the U.S. dollar continuing to collapse in value, one way to play that ongoing trend would be to invest in an Exchange-traded fund which provides you targeted exposure to foreign currencies.

Foreign exchange trading is nothing more or less than investiing in one currency versus another. Do your homework, find solid currency performers against the U.S. dollar, and invest in an ETF that caters to those circumstances and currencies.

One thing to understand about currencies in general; when one is going up another is coming down, and the U.S. dollar will be coming down for some time to come, so it'll be a good play for quite a while when choosing the opposite currencies correctly.

Sell Dollar Investments Fast

The warning is getting stronger as time goes on from about any credible investor in the world, that the U.S. dollar is on its way to crashing, and those heavily invested in dollar-denominated vehicles will be crushed if they don't get out of them as soon as possible.

At minimum, we should at least own something not denominated in U.S. dollars, and weight our investment portfolios in that direction.

Even today it was announced the Federal Reserve is going to continue to buy up mortgage-backed securities, to the tune of over $500 billion more through April 2010. That means even more dollars are going to be printed to pay for all of that, again, putting even more downward pressure on the U.S. dollar.

If you're overexposed, you'll sink along with the U.S. dollar collapse, don't let that happen to you while you still have time to change things.

Julian Robertson: Betting on Inflation

One of the greatest hedge fund managers that has ever lived - Julian Robertson, said in a recent interview on CNBC that he was just about betting everything on the inevitable inflation, which will decimate the U.S. dollar.

He stated one of the key problems with the U.S. financial policy, and that is that it has led to complete dependence on China and Japan buying our debt if we are to economically survive, or at minimum, we'll face "severe economic problems."

"It's almost Armageddon if the Japanese and Chinese don't buy our debt,” Robertson said in the interview.

Concerning inflation, Robertson stated, “If the Chinese and Japanese stop buying our bonds, we could easily see [inflation] go to 15 to 20 percent. It's not a question of the economy. It's a question of who will lend us the money if they don't. Imagine us getting ourselves in a situation where we're totally dependent on those two countries. It's crazy.”

Roberston added that while the Chinese probably won't stop buying US bonds, it's quite possible the Japanese will, and sell their long-term bonds, which he said would be worse than someone not buying at all.

"The U.S. has to quit spending, cut back, start saving, and scale backward Robertson said. "Until that happens, I don't think we're anywhere near out of the woods.”

While Robertson said he thinks the recession is in a temporary lull, because so many of the financial problems haven't been dealt with, and the Federal Reserve hasn't stopped printing money, that could readily change.

He said it's impossible to pay back what we've borrowed, and the only change of that remotely happening is if the Chinese and Japanese continue to buy bonds from the U.S.

As a result, Robertson is betting a lot of his fortune on the fact that inflation will eventually come and soar, something all of us at minimum need to be financially defensive about.

Marc Faber: Ignore Ben Bernanke

Marc Faber

Marc Faber is advising people to not keep their investments in the U.S. dollar, and not to invest in things like US bonds.

As far as the assertion by Ben Bernanke that "We will keep inflation in check," Faber says to completely ignore that fantasy.

Why Faber says this is the inevitable need for the U.S. government, via the Federal Reserve, to print more money, which will continue to put downward pressure on the greenback. He said with someone like Bernanke running the Federal Reserve, we need to operaton under the assumption the U.S. dollar will be worth close to zero, if not zero. He reinforces what he has said in the past, that we shouldn't in any way trust the Federal Reserve.

Faber instead says investors should place their money in investments that will hold their value, using gold as one of the options investors need to have some of their money in.

Over the next 10 years, Faber points to the soon rush to retirement of Baby Boomers, who will put increasing demands on Medicare and Social Security, which, along with other areas, will force the government to print an enormous amount of money.

That will result in even more inflation, and the loss in buying power of the U.S. dollar, if not its complete collapse.

Marc Faber

US Dollar Carry Trade Currency?

The statement from the Federal Reserve that slow economic conditions "warrant exceptionally low levels of the federal funds rate for an extended period," caused great pause today for those understanding what this will mean for the U.S. dollar, as it will probably take the place of the yen as the currency used for carry trades.

A carry trade is when an investor borrows using a currency with low interest rates for the purpose of investing that capital in higher-yielding assets. The problem with that is it is bad for the currency used as the investment of choice to start the process, which looks to be the U.S. dollar through probably a minimum of 2010.

The Federal Reserve said these conditions will continue, essentially reinforcing the reality that the U.S. dollar will be the carry trade currency going forward, although obviously not stating that specifically.

Dollar Collapse G10 Economic Power

The collapse of the U.S. dollar will be accompanied by the further erosion of the fading G10 bloc countries and their economic power, preparing the way for an world which will eventually be completely changes in focus and power.

Even so, the U.S. dollar will fall the most of the currencies like the yen, euro, Swiss fran, British sterling, among others.

Some think the regional currencies of larger countries will be the new safety valve for smaller countries, while the U.S dollar will assume the role of Japan in "carry trade" status going forward. That's not a good thing.

While this was happening before the economic crisis, the crisis has actually temporarily hidden this reality, but when growth truly resumes, the growing disparity between emerging markets and old money will come to light even further as that chasm continues to grow.

The U.S. dollar is expected to be hit the hardest, and the misguided policies of the U.S government from administration to administration, culminating in the total lack of control of the Obama administration and the Federal Reserve, will only hasten the downfall and make it worse going forward.

Jim Rogers Selling U.S. Dollars

Jim Rogers has never been one to shy away from stating his mind, and in his chosen field of commodities, he is right far more than he is wrong, and with the U.S. dollar, he has been warning for years that people need to divest of it and put their money in other currencies and investments.

Rogers stated in at the China International Financial Services Conference (CIFSC) last week in Guangzhou that he is winding down his position in the U.S. dollar, and will sell all of U.S dollars before he's through.

Citing the non-stop growth of debt by the U.S. government from administration to administrations, Rogers has asserted for some time that it's a flawed currency, which it is.

Radically and truthfully, Rogers has said the "story of the United States is over. A new story belongs to China.”

Rogers also stated that he no longer has an interest in investing in U.S. Treasury bonds, “because the government is constantly printing more banknotes.”

This means that the inflationary pressures about to hit us would cause an investment in U.S. Treasuries to lose value, even if returns move up some. Even so, Rogers said more than likely bond prices will rise significantly from where they are today, but he will focus on raw materials and companies that do business with a "real economy."

U.S. Dollar Index Plunges to Yearly Low

Dollar Collapse
The U.S. dollar index plunged to its lowest level, as well as against the Euro. The U.S. dollar index tracks a basket of six currencies against the U.S. dollar.

This will continue because of the misguided steps of the government and the Federal Reserve to print money and bailout the banking industry, AIG and the auto industry; money it really doesn't have, and which our children and grandchildren will pay for for decades.

In response, commodity prices rose as investors looked for higher returns, starting to believe they can add a little more risk to their portfolios, possibly wading in too early, as there really isn't much data to justify the assertion by Federal Reserve Chairman Ben Bernanke that the recession is over.

Dollar Collapse

Printing Dollars: Commodities and Inflation

Even if the economic crisis hadn't hit and the U.S. government printed an outrageous amount of dollars, prices of commodities would have still went up, but add that to the eventual demand from the emerging middle classes in China and the rest of the BRIC countries, and you can see the commodity bull market will pick up where it left off, and even go further out than it would have without the temporary setback from the economy.

Jim Rogers talking recently said historically, whenever governments print money commodities will always rise in price, and that will be the consequences of an out of control Federal Reserve, probably far more than it would have been based on supply and demand for raw materials on their own.

The U.S. dollar will get crushed by these circumstances, and ultimately, could end up collapsing under the weight of trillions of new pieces of paper printed because the Federal Reserve refused to let the free market clean itself out, and had to interfere in attempts to garner favor and reinforce its image as a rescuer in the minds of the American people.

While that backfired and brought them out into the open for the first time since their unfortunate creation in 1913, we'll have to pay for the actions of the FED for a long time, as will our children and grandchildren.

People Returning Solid Financial Planning

As the crisis has unfolded the folly of a debt-driven economy and personal finance lifestyle, people are returning to strategy of financial basics, and that's a really good thing.

When queried about their customers, financial planners say that their clients are getting back to saving more, using less credit, building up an emergency fund, understand how much risk they can be exposed to, and diversifying in safe investments.

Oh, and most importantly, they're now looking at long-term wealth building rather than wealth trappings created by the illusion that debt provides.

"Before the market chaos, there was a very low savings rate, inappropriate use of credit cards, too much risk in investments, excessive spending on residences," says Tom Warschauer, a finance professor. "Virtually every type of financial decision was being made in a kind of fairyland atmosphere, thinking 'This will lead me to be better off' when in fact that was never the case."

While some financial planners predict this may last for a decade, hopefully it will become the way of life for consumers around the world, who will have to go through it all over again if they never learn that excessive debt will inevitably always lead to these results.

FDIC Chairman Tapping Treasury Credit Line?

FDIC - Deposit Insurance Fund

Just three weeks after FDIC Chairman Sheila Bair said "Not at this point in time," when asked if she would need to tap into a Treasury credit line, she has changed her thinking and now says pretty much all options are on the table, implying a real crisis, which most of us probably know about.

At this time, the FDIC estimates that the agency will need somewhere around $70 billion through 2013 to be able to insure bank customers' deposits. The Deposit Insurance Fund now is at its lowest level since 1992.

The Deposit Insurance Fund has plunged to 0.22 percent of all insured deposits, below the mandated minimum level of 1.15 required by Congress. So far 94 banks have fallen in 2009 as of this writing.

Alt-A and commercial loans pretty much guarantee that 100s of more banks could collapse before it's over.

In May, Congress increased the FDIC credit line at the Treasury from $30 billion to $100 billion.

While Bair rightly said that the existing financial regulatory system should be changed in order to keep large banks from becoming too big to fail, she ignores that those provisions are already in place: it's called going out of business or declaring bankruptcy. This is why the Federal Reserve needs to be shut down so it can't pour taxpayers' money into the market to shore up banks and other businesses that are run poorly and can't compete.

FDIC - Deposit Insurance Fund

U.S. Dollar Drops Against Euro

U.S. Dollar drops to lowest level against Euro in a year

If your one of those that might have made investing decisions based upon the hapless Federal Reserve Chairman Ben Bernanke and his announcement that the recession is probably over, better take a step back and think things through.

With the drop of the U.S. dollar to its lowest level against the euro in a year, it means that a number of investors may have entered into riskier investments based on nothing but Bernanke's unsupportable conclusion. That's why he said it might be over, or it's "technically" over, i.e. from a technical perspective, which sounds to be me like he's covering his rearend for when it's discovered it's a fake recovery and not a real one.

“The dollar will come under further pressure,” said Ian Stannard, a senior currency strategist at BNP Paribas SA in London. “This continuation of the quantitative-easing program will provide further asset-market support. That’s going to lead to dollar weakness as funds flow out of the U.S., seeking higher returns elsewhere.”

The point is, if you're going to make riskier investments, never do it based upon something a Federal Reserve Chairman like Ben Bernanke asserts, as he and others like him are attempting to shore up their reputations and make themselves feel important; a very poor reason to invest in something riskier.

U.S. Dollar drops to lowest level against Euro in a year

What is a Municipal Bond?

A municipal bond is a bond that is issued by a government entity smaller than the state, so could be a city or smaller local government like those designated as a village. Others issuing municipal bonds could be school districts, counties, or a number of other government agencies. The key is they are below the level of a state government in definition and use.

The most powerful and attractive purpose for investing in a municipal bond is that they are in most instances exampt from Federal, State, and local taxes, although that needs to be confirmed, as there are exceptions to the rule, primarily based on what the money will be used for. Usually exemption from state taxes is based upon a resident in the state the municipal bond is issued.

With the subprime mortgage crisis, municipal bonds came under pressure and as a result dropped in value, as credit ratings plummeted in a number of circumstances.

Investors Flee Money Market Funds

With money market fund interest rates plummeting to close to zero, investors have been fleeing the poorly performing investment vehicle, and moving toward Treasurys as a better and higher yielding safer investment.

Just recently an extraordinary $55.23 billion was withdrawn from money market funds and placed in other investing sectors.

Some of this if from the huge amount of money being pushed into the system by central banks, causing the interbank borrowing rates to plummet close to zero.

This is the reason why Treasurys have rallied some when in these types of economic circumstances they wouldn't have.

Other areas people and institutions are investing in are corporate bonds and commercial mortgage-backed securities. Money market funds should continue to lose billions until interest rates start moving up again, which is doubtful in the near term.

Home Equity Mortgage Still Available

Although it is tougher to get a home equity mortgage than it was before the financial crisis, it's still not impossible, and in many cases, if you have a strong credit rating and balance sheet, isn't that much more difficult at all than it used to be, as banks don't make money if they're not lending out money; it's just that they're giving a lot more scrutiny to home equity mortgage loans than they have in the past.

One major consideration is how much you owe on your home, where you live, and how steeply the value has fallen. Assuming your financially qualified, the home value itself and what you owe on it is what will determine your success in getting a HELOC, and if those numbers are positive, your chances of getting a loan are obviously much better.

If you live in hard it states like California, Florida, Nevada and Arizona, where property values have plunged, and there's not sign they're going to rebound any time soon, it's really difficult to get a home equity mortgage, so you will need to manage expectations when you go seeking one there.

For those that have owned their homes for some time and have a positive balance after paying down the loan for awhile, have a decent chance of getting a home equity mortgage than those that haven't. Don't be afraid to ask, as the answer in many cases will be yes, but just not as many yes's are being said as they were in the past.

What is Commercial Paper?

Commercial Paper

Commercial paper is a tool of debt, or otherwise known as a 'debt instrument,' whereby a solid company will issue the debt for short-term capital needs. A lot of money market mutual funds will invest in commercial paper as part of their investing strategy for safe, solid returns over the short term.

When issuing the debt, a company will have to pay the money out at a specific day they've instituted as part of the investment, normally from between two to 270 days.

The general practice of commercial paper is to be sold at a discount, and so is used by companies to aid them in managing their short-term capital flows.

Similar to a money market fund, investors will use commercial paper to put their money they're not going to use in the immediate future, as it's very safe, and it's very easy to get your money out when you want or need it.

Not only is it very safe investment because the companies issuing the commercial paper have very high credit ratings, but also because it is backed up by lines of credit from banks, making it extremely safe. The result for investors is also low yields, which the safety of commercial paper offers.

Commercial Paper

What is a Money Market Fund?

Money Market Fund

A money market fund is a mutual fund that invests in short-term debt like Treasury bills, CDS, repurchase agreements and commercial paper, among other things.

While they are normally considered among the safest places to put your money, there are exceptions, like when Lehman Brothers collapsed a year ago and the net asset value of the money market funds they held fell below $1 (called breaking-the-buck), causing people to lose some of their initial investment. While that is a rare occasion, it has happened before in the past.

For the most part a money market fund is not FDIC insured, but there is the option of having it privately insured.

Another nice feature of a money market fund is their liquidity, whereby you can access your capital very quickly if you need to.

Because of the safety factor usually connected to money market funds, you will receive a much smaller return on your capital, and is normally used as a place to park cash when it's not being invested, or a place to put your money in case of economic emergencies where you can get at it quickly.

Money Market Fund

Money Market Fund Guarantee Program Now Over

Money Market Funds

In response to the collapse of Lehman Brothers last year, and the resultant fall of the net asset value of money market funds below $1, which is called breaking-the-buck, the Treasury Department put into place a temporary Money Market Fund Guarantee Program to help stabilize the money market funds in the country. Today that guarantee program will expire as planned.

The Money Market Fund Guarantee Program was put into place as investors in the money market mutual funds rushed to remove their capital from the funds, after the unusual experience of losing money on them. The temporary guarantee calmed things down, once it was understood their money wouldn't lose any of its value.

A money market fund is a mutual fund which invests primarily in short-term, high yielding US government bonds, commercial paper, and other short-term debt instruments. Very rarely has the net asset value of money market mutual funds fallen below $1, but it has happened, and while they aren't backed by the FDIC, overall they've been considered a very safe investment since they were instituted in 1970.

Money Market Funds

Dollar Plunges on Inflation Fears

Weakening Dollar

The U.S. dollar plunged against the Euro, pound, and numerous other currencies today, as renewed concerns about inflation drove up the prices of commodities, with many investors adding raw materials like soybeans, copper and oil to their portfolios.

Investors fled government bonds and the dollar looking for a hedge against inflation, as many are expecting the outrageous spending of the Obama administration to devastate the greenback, bringing enormous inflation for the years ahead.

"A falling dollar is viewed as inflationary," said Richard Feltes, senior vice president and director of commodity research for MF Global in Chicago. "The best inflationary hedge is typically to increase one's exposure to commodities."

Another positive thing for foreign investors is the weakening dollar allows them to buy the dollar-denominated commodities at bargain prices as their currencies strengthen against the U.S. dollar.

While the weather looks like it's cooperating with grains in the U.S., that won't matter for some, as while supply is increasing with wheat, for example, global demand is falling, which has caused wheat future prices to drop over the last couple of months, while being down by 33 percent from last year.

Along with gold, silver, oil and gas, many other precious metals also increased in value, including copper, aluminum and platinum. Heating oil also rose to $1.8713 a gallon.

Among the metals, copper continues to be a huge winner, as it has closed at a 10-month high, gaining 4.4 percent, much of that coming from increased demand from China, whose manufacturing sector has started to rebound a little, promising potentially even more demand.

Some are trying to twist this into some type of recovery, but in general, it's not huge demand driving these prices up, but the expected inflation coming from the weakening U.S. dollar; that, more than anything, will continue to spur foreign investment in commodities which is a bargain for them.

Weakening Dollar

U.S. Dollar | Monetary Policy China

U.S. Dollar Monetary Policy

With the outrageous policies of Barack Hussein Obama who is pretending he can spend money at will and not suffer any consequences, this has rightfully caused American trading partners, especially the Chinese, to be concerned over the eventual collapse in value of the U.S. dollar, which could devastate China because of their continual and misguided buying up of Treasury debt.

It is assumed that China must do this to continue prospering, (and to a slight degree that may be true), but this has went way beyond that, and American consumers aren't spending, so China is extremely exposed to devastating harm if they don't do something about it.

As a result, the U.S. dollar should be the major focus of Chinese-U.S. talks starting in Washington today as China pushes the Obama administration on how it will manage the fiscal deficit and protect the U.S. currency’s value. Of course the answer is they can't, and any student of the markets and honest economist will acknowledge that.

Treasury Secretary Timothy Geithner and Secretary of State Hillary Clinton will host two days of meetings talking on topics from the economic crisis to North Korea. The Strategic and Economic Dialogue is the first by the Obama administration with China.

The global recession has underscored the common interests of the economies, ranked first and third largest in the world, as Vice Premier Wang Qishan seeks to preserve the value of the world’s biggest Treasury holdings, while U.S. pushes China to rely more on domestic demand and not exports for growth.

Bizarrely, clueless Timothy Geither and equally clueless Hillary Clinton are pressing the Chinese on becoming even more socialist by providing more social safety in order to combat the wonderful habits of the Chinese for saving rather than spending. These wackos need to step down out of office for even bringing up such rot. They don't belong in a U.S. government position when they seek to export socialism to the Chinese. They're getting wackier and wackier by the moment.

China’s exchange-rate policy will be talked about. The U.S. wants a more flexible yuan, though Geithner has avoided a showdown on the issue, declining to repeat more ignorant comments he made in written communication to lawmakers after his Senate confirmation hearing in January that China was “manipulating” its currency.

Both nations are pumping cash into their economies to revive growth. Though Premier Wen Jiabao said in March he was worried about the safety of the nation’s U.S. assets, China bought $38 billion of U.S. notes and bonds in May, taking its holdings to $801.5 billion. The Chinese should never have done this, and they still be pay in the face of the horrid and inexperience displayed by the Obama administration.

The U.S. deficit could go as high as a record $1.85 trillion for the fiscal year ending Sept. 30, almost four times the previous fiscal year’s $455 billion shortfall, according to the Congressional Budget Office.

Federal Reserve Chairman Ben S. Bernanke will brief Chinese officials about how the U.S. plans to keep inflation in check over the next few years, people advised of the plan said this month. In June, Geithner told China that the U.S. wants to shrink its budget gap as soon as an economic recovery takes hold.

Unfortunately, Ben Bernanke is as clueless about monetary policy as they come, and along with the Federal Reserve, is largely responsible for the continued and lengthening recession, which should have been allowed to work its way out without government interference.

The U.S. dollar will continue to suffer under these tortuous and horrible monetary policies until the Keynesian way of managment is completely abandoned and recognized as outrageously deficient and unable to work, as decades of failure have already proven.

U.S. Dollar Monetary Policy

China US Treasury Investment

China US Treasury investment

Investment in U.S. treasury bills seems safe at this time, as there are no better alternatives amid the global financial market instability, experts told Xinhua Friday after China substantially increased the holding in May. That should change soon, and China investment in US Treasuries could backfire big time.

China, with the world's largest foreign exchange reserves, or 2.13 trillion U.S. dollars, bought 38 billion U.S. dollars worth of the bills in May, the highest monthly increase in nine months. The holding was 801.5 billion U.S. dollars, according to the U.S. Treasury Department's website late Thursday.

"It is within expectation as the U.S. dollar's role in the international monetary system is irreplaceable in the short-run," said Ding Zhijie, deputy director of the School of Banking and Finance of the University of International Business and Economics.

China added 80.6 billion U.S. dollars of foreign reserves in May, according to the figure released by the People's Bank of China. It means 47 percent of the new reserves were used to buy the U.S. treasury bills.

Ding said there are no better investment alternatives as the global financial market was volatile in May. The U.S. economy posted a better performance than other major economies at the time.

Chinese officials have aired concerns that the falling U.S. dollar could hurt the value of China's massive holding of U.S. dollar assets.

The U.S. Treasury Secretary Timothy Geithner said that China's U.S. dollar assets are safe in his visit to China in June.

Chen Bingcai, researcher with the China National School of Administration, said China has been cutting long-term bills and buying more short-term bills to improve investment structure.

He said China does not have to worry too much about the issue alone, since it does no good for the U.S. economy if it relies too much on capital from China.

Wang Tao, a researcher with the China Minsheng Bank, said China still needs to diversify its investment mix to avert risks.

He said China should use the huge stockpile to buy strategic resources, and advanced technologies. He's right, and they need to do that quickly

China investment US Treasury

China's Risk with Dollar

China buying U.S. debt dollars Treasurys

Over the short term China will continue to buy up U.S. dollars in order to keep their export business thriving, but over the long term they're definitely taking steps to ensure they're not forced to be put into this position again.

China’s foreign-exchange reserves are growing again, aiding the Obama administration to sell extraordinary amounts of debt as it seeks to pull the world’s largest economy out of a recession.

Stockpiles of currency rose by a record $178 billion in the second quarter to top $2 trillion for the first time, the People’s Bank of China said recently. The numbers are close to two-thirds the size of China’s economy.

The cash holdings are increasing as the central bank sells its currency, the yuan, to try to stop an appreciation that would make the country’s exports more expensive. The yuan sales mean for all the calls by China and other emerging markets for an alternative to the dollar as the world’s reserve currency, it has little choice but to keep buying U.S. government assets.

“People are talking about whether the Chinese may actually one day dump the dollar and Treasuries because of the problem in the U.S., but they are missing the point,” said Stephen Jen, head of macroeconomics and currencies in London at BlueGold Capital LLP. “The reserves are so big because China needs to keep the exchange rate stable for its exports. Therefore, they have to keep buying dollar assets.”

To me, Jen misses the point. Just because over the short term the Chinese are buying U.S. dollar debt doesn't in any way deter the idea that they will have a policy of getting rid of the dollar over the long haul. As the dollar continues to plunge in value and inflation really takes hold, then we'll see what the Chinese will really do.

The need to balance gains in its currency led China, the largest global holder of U.S. Treasuries, to more than double its holdings of U.S. government notes and bonds in three years to $763.5 billion in April, according to U.S. Treasury data. The amount was equal to 38 percent of its reserves at the time.

Stimulus Spending

Barack Obama’s administration is trying to sell a record amount of debt to pay for measures to revive the U.S. economy. New York-based Goldman Sachs Group Inc. projects that government borrowing go as high as $3.25 trillion in the year ending Sept. 30, almost four times the $892 billion in 2008, to finance the budget deficit.

The reluctance to let the yuan appreciate when the world is mired in the deepest recession in six decades means that China will keep accumulating U.S. debt, even if the amount of its purchases declines, according to economists at RGE Monitor, a New York-based research firm headed by economist Nouriel Roubini.

“Despite China’s concerns about the value of its large stock of U.S. assets, reserve diversification will continue to be difficult."

Cash Surge

China’s reserves have grown by almost 14 times over the last 10 years as exports generated a trade surplus that pumped in cash. Capital Economics Ltd. estimates that exports will generate 30 percent of China’s growth this year.

Investors have also recently pushed cash into emerging markets such as China, amid signs that their economies will recover more quickly than those of developed nations.

Such investment inflows mean that “policy makers bought dollars and sold local currency in order to prevent currency appreciation. China will continue intervening to keep the yuan trading at about 6.83 per dollar through the end of this year.

Yuan’s Stability

The yuan’s value has barely changed in the past year, following a 21 percent appreciation in the three years after China scrapped its dollar peg in July 2005. The demand for dollars conflicts with China’s recent calls for the world to consider drawing away from the greenback as its sole reserve currency.

“As the Chinese were becoming more vocal in regard to the need to move away from the U.S. dollar, they were in actual fact buying more dollars than ever,” said Derek Halpenny, European head of global currency research at Bank of Tokyo-Mitsubishi UFJ Ltd.

People’s Bank of China Governor Zhou Xiaochuan urged the International Monetary Fund in March to move toward creating a “super-sovereign reserve currency” to eventually replace the dollar. Premier Wen Jiabao said the same month that he was “worried” the dollar would weaken.

Speaking to Al-Arabiya television yesterday, U.S. Treasury Secretary Timothy Geithner expressed confidence that the dollar “will remain the principal reserve currency.”

Dollar Dominance

The dollar’s share of global foreign-exchange reserves increased to 65 percent in the first three months of this year, the most since 2007, according to the International Monetary Fund.

China is trying to reduce its reliance on the U.S. currency in other ways. It signed 650 billion yuan ($95 billion) of currency swaps this year with nations from Argentina to Belarus and is encouraging trading partners to use the yuan to settle cross-border trade.

The country’s top currency regulator this week relaxed curbs on overseas investment by local businesses, allowing more funds to flow abroad starting Aug. 1.

The 21.4 percent drop in net exports in June from a year earlier means “the yuan is stuck in cement until the middle of next year at least."

“The reserves will continue to pile up,” said Zhu Baoliang, chief economist of China’s State Information Center, an affiliate of the National Development and Reform Commission, the nation’s top economic planning agency. “Over the short term, there is not much that China can do but continue to buy U.S. Treasuries while hoping that the U.S. economy can recover as soon as possible so that China’s investment won’t suffer too much loss.”

However you want to communicate this, China over the long term will continue to diversify and not allow its currency and postion to be so dependent on the U.S. dollar. For now they'll continue to buy, but already they're taking steps to eliminate the inherent risks and very real threat of owning U.S. dollars.

China buying U.S. debt dollars Treasury's

U.S. Dollar in First Quarterly Loss since 2008

... U.S. dollar drops against Euro for quarter



The dollar rose versus the euro on Tuesday amid renewed risk aversion after a report showed an unexpected drop in U.S. consumer confidence in June.
The weak confidence report sent U.S. stocks lower and put a halt to an early sell-off in the greenback. Analysts also said the simultaneous end to the month, quarter and half-year led to increased volatility in foreign exchange trading, exacerbating intraday moves in currencies.
The decline in consumer confidence "was a big shocker," said Kathy Lien, a director for currency research at GFT Forex in New York. "The weaker confidence number should help the dollar recovery for the rest of the day."
The Conference Board's U.S. consumer confidence index fell in June to 49.3 from a downwardly revised 54.8 in May, the private business research group reported on Tuesday. Economists polled by Reuters had forecast a reading of 55.0.
The confidence index followed a report showing a smaller-than-expected dip in U.S. home prices in April and a report on business activity in the U.S. Midwest.
In midday trading in New York, the euro was last down 0.4 percent at $1.4010 after trading as high as $1.4152 earlier, according to Reuters data.
Despite Tuesday's gains versus the euro, the dollar was still on track for its first quarterly decline against the single currency since the first quarter of 2008.
At the same time, an index measuring the value of the greenback against a basket of major currencies declined about 6 percent for the quarter, its first quarterly drop since the first three months of 2008. The index was last up 0.5 percent at 80.235.
"The greenback has clearly become oversold," said Michael Woolfolk, senior currency strategist at The Bank of New York Mellon, in New York. "It appears that the consumer confidence report provided players with an opportunity to take profit on short dollar-positions."
UPBEAT VIEWS
Investors have sold U.S. dollars recently as stock markets and oil prices rose on an upbeat view for prospects of a global economic recovery and hurt demand for the greenback as a safe haven.
The MSCI global stocks index was on course for its best quarter since its launch in 1988, up 20.9 percent at current prices, while oil earlier hit an eight-month high of $73.38 a barrel.
"The second quarter was great for stocks and there have been signs things are getting better in the financial system," said Meg Browne, a currency strategist at Brown Brothers Harriman in New York. "Altogether, this is encouraging news and the reaction to the positive outlook in the markets has been to sell the dollar and buy foreign currencies."
Some currencies, such as the Australian dollar, soared during the second quarter. The Australian dollar gained 16.5 percent versus the U.S. dollar in the past three months, its best quarterly performance since it became freely floated in 1983. The Australian dollar was last down 0.1 percent at $0.8058.
The expectation of global economic improvement gained support from the CBOE Volatility Index, Wall Street's so-called fear gauge, which dipped to its lowest level since just before Lehman Brothers collapsed last September.
"The move back in the Vix levels pre-Lehman is a result, a by-product of the overall improvement in outlook," Browne said

U.S. Dollar | US Dollar Way Overvalued Says Study by Peterson Institute for International Economics

U.S. Dollar

The U.S. dollar is "seriously overvalued," mostly against the Chinese renminbi and some other Asian currencies, according to a new study published on Wednesday.

The Peterson Institute for International Economics, a Washington-based think tank, said the majority of the 29 currencies it studied need to appreciate against the dollar, with a large rise especially needed by the Chinese currency.

"The principal counterpart to the overvalued dollar is the undervaluation of the Chinese renminbi, which would have needed to appreciate about 21 percent on a weighted average basis and about 40 percent against the dollar to achieve equilibrium," said the study by economists William Cline and John Williamson.

Investor flight to the dollar safe haven since last year has pushed the U.S. currency up by about 10 percent, which on top of an estimated overvaluation of about 7 percent a year ago made for an overvaluation of about 17 percent by March this year, the study said.

But the dollar slid to its low in 2009 on June 1 against the euro and a basket of currencies amid optimism the prospect of a global economic recovery boosted riskier assets.

Despite the dollar's recent slump, the study said the currency remained "substantially overvalued."

Cline and Williamson said economic imbalances caused by the deficit and overvaluation of the dollar over the surplus and undervaluation of the Chinese renminbi posed systemic threats.

"It is important that as the world emerges from the current crisis these imbalances be corrected," they said.

To rebalance the global economy, Cline and Williamson argued China should change its peg from the dollar to a basket of currencies. Alternatively, China should resume the upward crawl of the peg against the dollar.

"Unfortunately, the most recent evidence points in the other direction, as the policy over the past several months of keeping the renminbi unchanged against the dollar has remained intact, despite the dollar's reversal toward a declining trend subsequent to its peak in early March."

"China has again begun to ride the dollar down," they added.

U.S. Dollar

Jim Rogers | U.S. Treasury Bond Bubble

Jim Rogers agrees with Peter Schiff that buying or investing in long term or 30 year government Treasury bonds will be a disaster, and investors should watch them in order to short them when the government stops interceding and artificially propping them up by buying them.

Investement expert Jim Rogers gave a scathing rebuke to clueless Obama Treasury Secretary Tim Geithner and his ideas in relationship to overhauling the bailout of the financial system in the U.S. Rogers in an interview on CNBC said Geithner, who was in charge of the NY Federal Reserve, was wrong for 15 years in a row, and continues to be wrong now. He adds that the Obama plan via Geithner will cause U.S. debt to surge even higher, and is creating an even worse scenario by the same people who didn't identify the crisis coming that we're in. Rogers concludes that Geithner has no idea what he's doing.

Consequently, similar to the insight concerning U.S. debt as Peter Schiff and the
Treasury bond market bubble bursting, Rogers said he has been shorting bonds, although he was ambushed by the Feds when they declared they were going to be buying Treasury bonds, causing Rogers to have to pay out when the Treasury bonds ended up going artificially higher. Just because the government is buying up bonds doesn't mean any of us should buy government bonds, and we shouldn't. Investing in U.S. Treasury bonds for the long term at this time is one of the poorest investment idea out there now.

Rogers added that he is still watching the long term Treasury bond market, and plans on shorting it again, as the amount of debt the U.S. is issuing and the huge amount of money being printed makes inflation almost a certainty. It will also push down the value of the U.S. dollar, making government bonds a risky financial instrument going forward. Another factor making the bond bubble being burst a reality is the low interest rate policy of central banks, which will deflate of cause the bubble to burst.

When the Federal Reserve announced they were going to buy up long term U.S. Treasury bonds, speculators zoomed into the market to buy them up, causing them to hold in value, when in fact they should have been dropping in value. That has added to the bubble being ready to burst, as who's going to be stupid enough to buy Treasury bonds when the government is holding them. They're going to overall get stuck with them, and then what will they do?

Jim Rogers has said in the past he's one of the worst market timers, and doesn't attempt to time the market, and in relationship to bonds said he doesn't know when he'll short long term Treasury bonds again, as it could be sometime this quarter or maybe not till next year.

Government bond prices and bond yields are worthless and meaningless at this time, especially with the 30 year Treasury bond. The only ones buying those bonds are the clueless or the speculators. Long term bonds are dead in the water, and we need to know that before thinking of putting our money down to buy government bonds.

Some people unbelievably think buying bonds is a safe bet at this time, and they'll learn the hard way that they aren't if they go that route. Forced liquidation has been one of the artificial props keeping bonds floating, as well as the U.S. dollar for a short time. That seems to be winding down now, and gold is looking to be the best safety hedge and protection against inflation like it usually is. Forced liquidation has kept gold from performing in its usual manner, but is now starting to act and move like it usually does in difficult economic times.

On a little bit of a different note for Jim Rogers, he started up the Macquarie and Rogers China Agriculture Index fund recently in order to take advantage of the enormous upside potential of China. The China fund measures the consumption of agricultural products by the Chinese, and floats or moves in conjunction with that. The growing middle class in China guarantees that once economic times start to recover, they'll be ready to resume their consumption habits which should make the Macquarie and Rogers China Agriculture Index a good place to put your money for those looking at the long term.

Commenting on Central- and Eastern-Europe, Rogers also said he's not going to put a dime into those areas, as the economic conditions are bad, and they're probably going to get worse before getting better. Currency rates in Eastern Europe especially have fallen since the beginning of 2009.

The key reason Jim Rogers asserts for buying commodities is the inevitable increase in inflation resulting from the misguided government bailout plans. Commodities will resume their bull run and become hot again and extend out longer than he expected because of the temporary lull in buying by consumers and governments.

Back to investing, or rather, not investing in government bonds - specifically the 30 year Treasury bond - Jim Rogers, as I said, is watching the bond market for opportunities to short it. He's also looking at equities in the U.S. the same way, as he's shorting a number of bellwhether companies like IBM, JP Morgan Chase and General Electric, among others. Anything connected to the U.S. dollar, which we should all be moving out of, is looked upon as week, and not something to put our investment money into. General Electric has plunged in value by 65 percent from last year at the same time. Most of the reasoning behind this is the horrid government economic bailout plan which will prolong and deepen the economic conditions.

U.S. Dollar and FOREX in 2009

This year promises to be a very interesting year for the FOREX in connection with the U.S. dollar, as everyone is expecting the collapse of the dollar, but the obvious question is when that process begins, and which currency will exploit that weakness, to the benefit of those participating in foreign currency trading. Now that online currency trading has made it so much easier to trade the U.S. dollar against other currencies, many more traders are doing their forex trading online, making it a very busy business, even more thant currency trading of the past. As far as the forex goes in 2009, it promises to be a wild year this year, and there are probably a lot of opportunities to make a lot of money on the coming collapse of the U.S. dollar if we're patient and willing to wait. Eventually we'll benefit from the fall of the U.S. dollar and U.S. Treasury bond market if we watch things closely and enter the foreign exchange in a timely manner.

2009 should be a good year to put our money in the forex, and the online forex should help those of you who are looking to move in and out of the market with little difficulty, by using the software offered by a number of online forex trading companies.

We may see more currency fluctuation this year on the forex market, and so while their could be more risk, there'll also be more reward for those trading the dollar on the forex. If you're not too familiar with currency trading, the forex market, or even online forex trading, you should probably get yourself a good commodities broker while you learn about forex trading strategy and how to even trade currency in the forex market.

To me, the greatest thing to know this year for trading foreign currency, is simply watching how the currencies interact with the U.S. dollar, and simply watch and wait until the downward trend of the dollar begins. We're probably already at the beginning stage of this, so getting familiar with the forex exchange or if you know what you're doing, getting ready for your 2009 currency trading, because it's going to be a whoper this year, and a lot of money will be lost and made by trading the forex.

Other than tracking the strength of the U.S. dollar, also watching the interest rates other nations set for their currency will partly determine how they may fall or rise against the dollar, and currencies will respond strongly to what nations determine there. Build your forex trading strategy aroudn that this year, as it simplifies things, and unless you're completely in the forex market, and immersed in how it operates, that should be the determining factors going forward for investing in currencies via currency trading.

You can of course trade outside the U.S. dollar as coupled with other currencies, but even if you have knowledge of other currencies and their strengths or weaknesses against one another, the U.S. dollar, for now, will continue to have an impact on currency trading, whether its online currency trading or directly through a commodities broker. So trading the forex doesn't have to be complicated, but you do have to keep up with trends and the general economic and financial states of the nations' currency you're looking to invest in. How they specifically relate to the dollar in that context is the key to foreign currency trading.

If you're comfortable with it, I would definitely look at the way you can formulate an online currency trading strategy on the forex market. Forex trading online is pretty simple, fast, and you can get immediate feedback on the market and currency you're trading in, and many times you can get a dummy account to trade the forex and practice before committing your cash to it. I've seen a number of these online forex software programs and websites, and many of them do a great job. You do have to watch to make sure you close you online forex trades, as forex trading online doesn't ensure those things, and you could make a trade thinking you've locked in profits, and then forgot to close it with the software. Trading the forex online means you're dealing with something mechanical and not human, so you've got to realize it's dumb, and online currency trading can be risky if you forget the proper steps to take that you would otherwise simply tell a currency broker to do. The best thing in that case for forex trading online is to make a cheat sheet list and have it right beside your computer. Once you learn the process of online forex currency trading, you can then put them in a list and just follow it step by step as you make the proper currency trade inputs on your computer.

This year, in spite of the economic turndown, promises to be exciting, and as gold and silver start to move upward, and the U.S. dollar starts to collapse along with U.S Treasurey bonds, we'll see all sorts of opportunities to partcipate in foreign exchange trading. The forex and the dollar will do a lot of business this year, and we need to get a basket of currencies to watch as the story of the collapse of the U.S. dollar unfolds, and we are ready with a forex exchange trading strategy that can be very profitable for us in 2009.

U.S. Dollar Drops against Euro, British Pound

The U.S. dollar fluctuated against other major currencies Friday, dropping against the euro and British pouond after data showed that U.S. non-farm payrolls fell in January by the largest amount in 34 years, while the market turned its attention to President Barack Obama's misguided fiscal stimulus package and bank-rescue plan.
The dollar index, which measures the U.S. unit against a trade-weighted basket of six major currencies, was at 85.78 in recent action, compared with 85.73 in North American trading late Thursday.
The greenback rose 0.6% against the Japanese yen to 91.68 yen, but fell against the euro and the British pound.
The euro rose 0.6% to $1.2862 and the British pound gained 0.7% to $1.4726.
"The dollar's rally against the Japanese yen suggests that traders believe the bad number will probably push the Obama administration to act quickly on passing the stimulus plan," said Kathy Lien, director of currency research at GFT.
'These numbers are dreadful but does it matter? No. All the prior labor market indicators, notably the claims data gave a feeling of foreboding before these numbers. The data broadly delivered.'

— Alan Ruskin, RBS Greenwich Capital
The Labor Department reported Friday that non-farm payrolls fell by a seasonally adjusted 598,000 in January after a revised loss of 577,000 in December, the government said. It's the largest payroll loss since December 1974.
The unemployment rate soared to 7.6%, compared with 7.2% in December. It's the highest unemployment rate since September 1992.
"These numbers are dreadful but does it matter? No," said Alan Ruskin of RBS Greenwich Capital in a note. "All the prior labor market indicators, notably the claims data, gave a feeling of foreboding before these numbers. The data broadly delivered."
About 3.6 million jobs have been lost since the recession began just over a year ago, representing about 2.6% of employment. About half of the jobs disappeared in the three months following the Sept. 14 collapse of Lehman Brothers Holding Inc. (LEH) .
On Wall Street, U.S. stocks surged, with the Dow Jones Industrial Average rising 151 points, or 1.9%, to 8,214.
"Global markets further stabilize as the escalating superlatives in the U.S. unemployment gloom increase the likelihood that the Senate will pass the $920 billion fiscal stimulus package as early as today," said Ashraf Laidi, chief market strategist at CMC Markets.
Stabilizing risk appetite has weighed on the U.S. dollar, the Swiss franc, the Japanese yen, and the Canadian dollar, while the biggest gainers have been the Australian dollar, the New Zealand dollar and the British pound, Laidi said.
Eyes on Washington
The Senate could vote on a huge economic stimulus plan on Friday if a bipartisan group of senators can reach an agreement on a compromise that would trim the size of the tax and spending bill, Senate Majority Leader Harry Reid said Thursday evening. See full story.
"Despite the staggering job losses, the markets are not terribly focused on the non-farm payrolls numbers today," Lien said. "Traders are hopeful about developments in Washington including a possible Senate vote today and a bank rescue package on Monday."
The Obama administration on Monday will release its "comprehensive plan" to revitalize the financial markets, which is expected to include a new strategy to deal with banks' bad assets and a new program to help troubled homeowners avoid foreclosure.
Secretary Timothy Geithner will unveil the plan in a speech on how Treasury will employ the second half of a $700 billion bank bailout package as well as other new programs to shock the financial markets out of the recession. Read more.
"From a risk appetite perspective, the market is unwilling to sell risk trades ahead of Geithner providing clarity on his plans for the U.S. financial sector," Ruskin said. "Currencies like the yen will fail to get any lift before then, while it will offer the emerging world some near-term protection."
Canadian dollar under pressure
The U.S. dollar was last up 0.8% against the Canadian dollar after surging to an intraday high of C$1.2539.
The loonie is "the worst performing currency after Canada's December payrolls fell by a record 129,000," Laidi said.
Employment fell by 129,000 in January, pushing the unemployment rate up 0.6 percentage points to 7.2%, Statistics Canada reported Friday.
This drop in employment exceeds any monthly decline during the previous economic downturns of the 1980s and 1990s, according to Statistics Canada.
Elsewhere in the currency markets, the British pound surged 0.7% against the greenback after hitting an intraday high of $1.4766.
Sterling also rallied in the previous session after the Bank of England cut its key interest rate to 1%. But data also came out from the lender Halifax, showing the first monthly house price rise in 11 months.
"Markets will not be confident that rates have reached their lowest point, but there will be speculation over a period of stability," said analysts at Sucden Financial.
The British pound also has been a beneficiary from growing global risk appetite. As one of the countries seen suffering the most from the credit crunch, the pound tends to rise when fears over the global economy abate, while the euro may also experience a similar move.

U.S. Dollar: Falls Against Yen

Although the U.S. dollar was the strongest against the Japanese yen in a month earlier on Thursday, later in the day it dropped slightly as investors wait for key jobs data which should confirm the U.S. labor market is under extreme stress.

FOREX trade had the dollar declining against the yen later on Thursday, in anticipation of the expected weak jobs report. It fell from its high to drop by 0.2 percent to 90.94 yen on FOREX trading.

I'm not sure why currency traders are looking to the stimulus plan as a measure of what the U.S. dollar is going to do, as it will make little difference. Socialism isn't going to strengthen the U.S. dollar whatever way you look at it.

As a matter of fact, it'll hasten the collapse of the U.S. dollar as the Federal Reserve will have to print out its fiat money in order to pay for the outrageous sum of debt. That will eventually result in inflation and the dollar plunging in value.

Even the goofy idea that changing an accounting rule would make investors be more adverse to risk is a ridiculous assertion. Playing with numbers won't change the dollar in any way, or the current recession.

The so-called accounting fix could keep banks from generally marking down all assets to prices a badly run nationalized bank could have to pay. Welcome to the new socialist United States.

Tinkering and playing with accounting rules changes nothing, and the value of the U.S. dollar or yen, or any other currency always relates to the underlying fundamentals and nothing else, even when things temporarily get mixed up like in the recent forced liquidation period which made the dollar seem to be strengthening, even though there was no reason it should have been.

Sources say that neither the U.S. Securities and Exchange Commission or Treasury Department were talking about suspending the fair value accounting rule.

Nations and investors will slowly back out of investing in the U.S. dollar through buying Treasuries, as exports no longer make sense when consumers aren't buying products any longer. The motivation is thus no longer there to buy up U.S. debt to finance consumers' purchases.

As far as currencies go, the yen should perform as a place of safety again, along with gold and silver. The U.S. dollar will continue to weaken and collapse, leaving the usual havens of safety the place to go.

The euro also dropped slightly against the yen, while sterling made a slight gain.

Currency trading will be extremely important going forward, and the FOREX market a place to make a lot of money for those who understand what they're doing and that the U.S. dollar is set for a long term plunge in value, collapsing to low levels.

The yen should remain strong during the time the dollar falls.

U.S. Dollar: Haven No More?

The idea that refuses to die is that the strength of the U.S. dollar over the last several months has been because investors are seeking it as a haven. I think that couldn't be a more wrong assessment of the reality happening.

What has happened is the shortage of access to cash put hedge funds and companies into positions of forced liquidation, which made them sell off their gold and other commodity positions in order to temporarily halt the bleeding and get some access to cash.

It was never a trust in the US dollar that made that happen, but the absolute need of cash that drove the actions.

The ICE's Dollar Index, which tracks the U.S. dollar against the yen, euro, British pound, Swiss franc, Canadian dollar and the Swedish krona, fell today as cash becomes more readily available, and Americans start to buy up available homes that have been abandoned. People feel safer putting their dollars there than in the greenback itself.

Pending home resales have risen by 6.3 percent to 87.7, the first growth since August 2008. In November pending home resales stood at 82.5.

As far as a haven of safety for investors, we'll see gold take up the usual role, as forced liquidation unwinds and investors put their money into what performs well in difficult economic times.

As I mentioned, investment funds and large companies had to sell off their gold in order to raise cash, that is why gold performed in an abnormal way. It's also why some of the projections of the collapse of the U.S. dollar have been put on hold for a period of time. Even so, it will collapse, along with the bond market collapse. It's only a matter of when, not if.

What all of this says about the U.S. dollar, is it's immediate and long term future is connected to the sentiment of people and their economic concerns. We've seen gold start to rise, as expected, because fear and concerns over the health of the economy are pushing people to invest in gold as the real safety outlet.

Gold will be the real haven going forward, not the U.S. dollar, which never can or should be. Caution is ruling the day, and it will for some time. That means gold will surge in 2009, while the U.S. dollar continues to fall.

The question must be put forth on why the financial press, especially in the U.S. continues to make it look like the U.S. dollar has some type of fundamental that makes it a place of safety. Everything that can happen to make the dollar weak is the underlying reality, not the opposite.

So the idea that it is a haven is bizarre at minimum, and reckless at best, as far as making it look like people should be investing in the dollar rather than running from it as fast as they can.

Against every currency the greenback has fallen today in the ICE Dollar Index, dropping against the yen, euro, British pound, Swiss franc, Canadian dollar and the Swedish krona by mid-afternoon.

In other dollar-related news, the Federal Reserve announced it would extend its currency swaps with 13 other central banks through October 30. That extends the currency swaps from the end of April.

Now that the artificial propping up of the dollar has come to an end with cash and credit flowing stronger, the days of the U.S. dollar being considered a haven or place of safety are over. It never was that, but people misinterpreted, and continue to misinterpret the period of forced liquidation which propped up the dollar because of the sell off of dollar denominated commodities.

US Dollar: Imminent Collapse?

The forces that have allowed the US dollar to remain strong seem to be coming to an end, and it could be any time that it collapses under the weight of its inherent weakness.

A number of dollar experts, including Peter Schiff and Jim Rogers, agree with the sentiment that the US currency has nowhere to go but down.

Forced liquidation and deleveraging have kept the currency artificially high, but now those positions are unwinding, and so they won't prop up the US dollar any longer.

This will have a significant impact on dollar related investment vehicles like US Treasuries and bonds.

With the Federal Reserve running the money printing presses non stop to pay off its promises, there's nowhere for the US currency to go but down. Inflation is just around the corner, and it's a matter of when, not if, it comes.

Commodities have already started to rise, especially the metals, as gold and silver enjoyed a big jump recently, and that will continue throughout 2009. Some think platinum prices will also rise in 2009, even though the demand from the auto industry has slowed.

As far as the future of the US dollar, it's going to plummet in value in the near term for sure, while some are even beginning to think the unthinkable, that there will emerge an alternative currency the world favors, just as the pound was dropped for the US dollar long ago.

China is even beginning to experiment internally with using its own currency for transactions within its more successful economic regions, rather than the US dollar. We know the reason that experiment is going on, as the China currency could sometime emerge as the favorite to use in global transactions.

Any investment connected to the US dollar will suffer going ahead, and the dollar will not continue to retain its strength or go up over the long term. It will of course have its small seasons of upward movement, but overall the chart will go down.

This will get even worse because of the US government interfering in the free market and bailing out tons of poorly managed companies and sectors, all in the name that they're "too big to fail." Too bad, as the economy always cleans and flushes out the poorly run companies and emerges stronger than in the past.

That won't happen now as taxpayer money will be used to support the badly run companies and allow them to last in the face of the quality companies that would have taken over the bad.

In the short run, the US dollar will remain the currency of choice, but I don't see how going ahead, and the failed big government policies that are destroying the dollar, will allow the currency to remain as its been. It won't happen right away, but it will happen unless we get people in the government that understand monetary policy.

The future of the US dollar is bleak, and it will buy less and less going forward.

For the Treasury bond, the reason it's in a bubble and will collapse, is nations are starting to cut back on buying it, and speculators have entered the market giving it the illusion of strength. In reality, the US government will be the final holder of the bonds, and nobody will be there to buy them. Then what will they do?

The US dollar is heading for a fall, get out of them while you still can.

U.S. Dollar Collapse 2009 | The Perfect Storm?

The idea of the U.S. dollar collapsing in the way it's being thought of today, would have been unheard of in times past. Sure, we've had times of steep inflation where it was dollar was devalued, but nothing like the perfect storm approaching us now.

We have everything from the many variables connected to the economy, foreign governments eyeing the dollar suspiciously for the first time, low interest rates, U.S. Treasury bonds about to burst, China slowly moving out of U.S. dollars (selling bonds), out of control government bailouts, more government bailouts, increased socialization of American economy, and finally, the misguided idea of the dollar printing presses running day and night to provide the money to deal with all of this.

This doesn't include the bloated budgets needed to handle the ongoing policies of FDR - which President Barack Obama foolishly has asserted he's going to continue and expand - like social security and medicare, which will skyrocket even more on a yearly basis as baby boomers swarm into their retirement years.

We have to understand the U.S. dollar can collapse in a number of ways, and it's not always obvious that it has, especially with its ultimate enemy: inflation. But there's no way inflation isn't going to come, as the promises and misguided policies of politicians hoping to hold on to their government positions, ensures the printing presses will continue to run, and also ensures the dollar will buy much less. This is the type of collapse that hides what's really happening and the cause, as most people don't understand the direct correlation between printing hoards of money and the consequential devaluing of the dollar ... or any currency for that matter.

The reason America's been able to get away with pushing the limits with this has primarily been the acquisition of U.S. Treasury bonds by China. China is now abandoning that strategy and moving its money elsewhere. That means with China no longer financing the U.S. economy, America will have to look for financing elsewhere. Where would that be, as no other country is going to buy up an asset like the U.S. dollar when it could be on the verge of collapse.

There is no other recourse for the Federal Reserve (in their minds) but to keep the printing presses running. It doesn't occur to government leaders that they have no power in these affairs, and the real answer should be to downsize government, along with its unrealistic programs it offers citizens to buy their votes and generate dependence upon them.

One unfortunate side effect of this is people could remain in the dark if they don't understand that printing money will weaken the dollar and push the prices of goods and services up. If they don't understand this, we'll be doomed to repeat the fiasco again and again, as we continue to follow the same strategies and make the same mistakes.

China Using Yuan instead of Dollars in Transactions

China has already said it will allow its yuan to be used internally for settlement in some of its riches provinces:

"China will allow the yuan to be used for settlement between Guangdong Province and the Yangtze River Delta, China's two economic powerhouses, and the special administrative regions of Hong Kong and Macau, according to the central bank.

"Meanwhile, exporters in the Guangxi Zhuang Autonomous Region and Yunnan Province in southwestern China will be allowed to use the yuan to settle trade payments with members of the Association of Southeast Asian Nations.

"Those moves are expected to facilitate overseas trade, as Chinese exporters might face losses if they continue to be paid in US dollars..."

Putting the inevitable inflation scenario aside (which will happen, it's only a matter of degree) we could have a more robust slaughter of the dollar, based on the other numerous factors we've mentioned above.

If China decided to take drasic measures and sell a lot of their Treasurys, that would put tremendous downward pressure on the value of the dollar, while there's also the real possibility of OPEC, and others, deciding to get out of US securities as well, again, making America's only choice to print more money to pay off its debts and faulty social programs.

Another important part of the economic puzzle is that China has obviously been the primary provider of inexpensive goods to American consumers. So even though the U.S. has pressured China to increase the value of the yuan, the result would be higher prices of goods for Americans, which would end up causing even more pain. A perfect storm ending with the collapse of the U.S dollar?



Many financial and economic experts have told government officials they needed to stay out of the economy and just let things run their course. Past experience has shown that government interference makes things worse, not better, for the economy.

So will the U.S dollar collapse in 2009? It's a very real possibility. We have a perfect storm of variables that could together bring the dollar down to emerging markets status.

Foreign Investment in Long-term U.S. Treasury Bonds Falls in November - It's Only the Beginning

We've been talking a lot lately of the crisis with the U.S. dollar and how it's probably already starting to happen, even though there's been some temporary strength in the greenback.

A government report confirms it was the experience in November, as demand for long-term Treasury bonds from investors outside the U.S. fell, along with corporate and agency debt.

While many "experts" are saying it's the decline of risk aversion, I think that's totally wrong. That falsely assumed there was risk aversion involved in the first place for their to be a decline. There wasn't, as the Treasury report said.

What serious international investor, whether it's an individual, fund or country, doesn't know what's going to happen to the U.S. dollar going ahead? They know what all this misguided stimulus debt is going to do to the value of the dollar.

Here it is for you in simple terms:


The government wants to spend money it doesn't have

They can't get foreigners to pay for that money

The Federal reserve announces it'll buy up U.S. Treasury bonds

Speculators swarm like sharks around a bleeding body

Speculators buy Treasurys knowing Fed will buy them back

Fed is holding Treasurys with no one to sell them to

Fed prints more money to pay for further debt

The U.S. dollar plummets in value and inflation rears its ugly head

This is what's ahead for the U.S. dollar and Americans. Why do you think foreign investors are no longer buying the U.S. dollar? They know what's going to happen to it, and haven't been viewing it as a place of safety as some have wrongly asserted.

Speculators have been buying up the dollar and keeping it where it's been because they then resell it to the government, which said it was buying it. Some analysts assumed it was people buying to hold the bonds, when in reality they were only buying to resell to make a quick profit.

That gave the illusion of a market for the dollar, when in fact it was something entirely different.

If you aren't sure about that, just ask yourself the question of why foreigners are cutting their investment in Treasurys. This is just the beginning of fleeing from the dollar, it's going to get much worse.

U.S. dollars are not the place to be at this time, investors need to be moving out of them.