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.

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.

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

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.

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.

Is the Party Over for U.S. Dollar? Probably!

Earlier this month I asked the question of when the artificial strength of the U.S. dollar was coming to an end. We may be seeing the initial move toward that happening, as it seems deleveraging, which propped the dollar up, may be winding down.

The only question for the dollar, has been how long the deleveraging would take to unwind, as the complexity of the funds involved made it impossible to know. It seems the majority of that has happened now, and the dollar is responding in a predictable manner.

With U.S. obligations now in the trillions of dollars, the absolute necessity of a strong U.S. dollar is crucial to the successful implementation of the misguided bailouts and simulus package, but that isn't going to happen any time soon.

Some were hoping the deleveraging would last longer, giving the dollar a longer period to remain strong, but that isn't going to be the case. Most analysts believe that not only is downward pressure coming short term, but it should last for some time as well.

Today the greenback dropped to a 13-year low against the yen, and fell to its largest one-day loss against the euro, as currencies responded to the slashing of the benchmark interest rates to a range of zero to 0.25 percent, which is the lowest among major economies in the world.

While there are those looking to what Japan did as a blueprint for the U.S., that's a huge mistake for a couple of reasons.

First, the Japanese economy hasn't come near to recovering from its performance when they instituted a similar strategy as set forth by president-elect Obama. He wants to build up the infrastructure of the nation to create jobs.

Just that alone is an unfortunate idea, as it in reality crushed the Japanese economy.

But that's not the only reason it's foolish and misguided. The second reason is the difference between Japanese and American investors.

In Japan, people were willing to invest in the bonds issued by the government because of the huge savings available, as well as the willingness of local investors to fund the debt. Americans can't do that, as they basically have no savings, which makes that a mute point.

So who will fund U.S. debt with the low interest rate and the government talking pursuing quantitative easing (buying Treasuries), that will put more downward pressure on the U.S. dollar.

In the end, the government should have listened to the many voices saying they should let the market sort out the mess, as it's the best mechanism available to do that.

Now that they've decided to enter fully into the fray, they've done far more harm to the U.S. dollar, the economy, as well as the American people.

Essentially everything they've done has backfired and been impotent. It will continue to remain that way no matter how much money they throw at the problem. We're all going to suffer because of their inability to leave things alone and resist intervening.

We're going to be in for a significant bear market concerning the dollar for some time to come. It's only just beginning.

Ron Paul talks on the Root of the Problem of Financial Bubbles

Ron Paul gives a lesson in the root causes of financial bubbles and what we need to take care of it so we can have a sound U.S. dollar.

German Chancellor Angela Merkel Blasts Use of "Cheap Money" for Economic Management

Although German chancellor Angela Merkel and the German government has implemented a fiscal stimulus plan, it was an extremely modest €12bn over the next two years. While that was probably a mistake, at least Merkel understands that creating money from thin air won't do a thing to take care of the problem they're in.

Merkel and the German government have been coming under increased pressure to contribute to a huge stimulus in relationship to the European Union; now standing at €200 billion. That would be about 1.2 percent of GDP of the 27 member states.

Talking about the contribution of the drop in value of the U.S. dollar to the current global economic crisis, Merkel stated to the German parliament:

“Excessively cheap money in the US was a driver of today’s crisis. I am deeply concerned about whether we are now reinforcing this trend through measures being adopted in the US and elsewhere and whether we could find ourselves in five years facing the exact same crisis.”

Some analysts assert the action wouldn't do much to change the economic crisis anytime soon. They're of course right, as is Merkel.

History has proven that the utter stupidity of the New Deal did more to create the Great Depression in the U.S. than anything else. Printing money, devaluing currency, and generating inflation is never an answer to an economic crisis.

The best thing to do is let it play out and allow the market correct itself. That cleans out the bad businesses and leadership, and makes the free market much stronger.

Throwing money at poorly run companies does nothing but reinforce poor management and keeps the real problems from being solved. Government interference in what would have been a short period of economic struggle created the infamous Great Depression in the U.S. We don't need to do the same and create a worldwide one.

Ron Paul in Houston Calling to "End The Fed" - Part Four

Ron Paul in Houston Calling to "End The Fed" - Part Three

Ron Paul in Houston Calling to "End The Fed" - Part Two

Ron Paul in Houston Calling to "End The Fed" - Part One

Ron Paul on How to Solve Monetary Problem

Says fiat-dollar system is over: it has failed

Some of the issues talked about:

Need to get to bottom of problem, not offer bandaids

Central bankers can do what they want - no checks-and-balances since 1971

New international reserve currency being discussed

Central bankers selling gold to make it look like U.S. dollar is stronger than it really is.

Yearly deficit should be a major concern

Commodity standard would balance system - restrain problem

Central banking is problem

Need new monetary system

Sound Money is the Answer