What is it with the U.S. Dollar Continuing to Climb?

The idea is being floated around that the U.S. Treasury bond is being considered the safest place to park your money during the economic turmoil, but I think that isn't the case at all. I'll get to that in a minute.

How the theory goes is people must sell assets in order to purchase the U.S. Treasury bond, and in so doing, pushing the value of the U.S. dollar up.

My own thinking in relationship to forced liguidation, is there could be companies still selling assets to raise cash just to survive, and that could still be playing out. We haven't heard much about that lately. That would offer some support to the dollar temporarily as well.

As far as the idea that the U.S. Treasury bond is being acquired because it's a haven for investors, I think that is completely wrong.

What happened is the Federal Reserve announced not too long ago it would buy up U.S. Treasury bonds, which brought up happy flags to those in the know. In response to that announcement, speculators ran into the market to buy them up, counting on the Fed to end up holding the bag.

Peter Schiff gives his take on this very idea here. I think he's right. Most people aren't buying U.S Treasurys now in order to hold them till maturity, they're buying them to sell back to Uncle Sam.

Some people may get burned believing the talking points of those that don't understand the underlying reason for the U.S. dollar holding its strength.

This has probably become a giant ponzi scheme with the U.S. government ending up holding the final batch of U.S. Treasury bonds that no one else is willing to buy. That will make things interesting.