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Churchwork
07-27-2008, 10:16 PM
US Dollar Index Collapse

Jessie Livermore said stay the course if you know you are right.

The US Dollar Index is currently trading at 72.80. What happened to the Wiemar Republic?

There is 54 trillion in unfunded liabilities, a massive trade deficit of more than 5% GDP, debt/GDP in USA over 400%. The manufacturing sector has being gutted. USA has no energy infrastructure. It imports 70% of its oil and eats up 25% of the world's oil with only 2% of world's population. 97% of US transportation system depends on oil. US has no plan for energy over the next 10 years. 50% of the trade deficit is due to oil. They'll have to monetize the debt. To pay down 400% debt/GDP, why not just kill your currency in half to make the burden only 200% in theory? Ongoing war is never good for a currency. Those unproductive expenses could have been used for economic purposes.

At the margin Sovereign Wealth Funds owned by Central Banks keep liquidating their US dollar holdings. That's all you need for the US Dollar to keep falling. George Soros says the US dollar has a lot more to fall, but he also says, there is no alternative to the US dollar. Actually there is an alternative-the Euro, which was designed because of the fear of the US dollar collapse. There needed to be a backup global reserve currency.

Israel has been reclaimed by the Jews and made a nation again. Therefore, the Euro will excel, because we are in end-times, and the Euro represents the the 7 heads with 10 kings in Revelation. Some say the 7 heads is 7 global regions such as North America, South America, Europe, Middle East, Africa, South east Asia, but that's only 6. I think of the 7 heads as the 7 monetary power of the G-7 and there are the G-10 countries as well with their 10 kings (all in North America or Europe), or 11 countries. Maybe they need to drop 1. The G-10 are just 3 more countries than the initial 7. It's all about the money!

Housing will drop which takes US dollars out of the system, but the Fed keeps pumping that money back in with socialist bailouts. As housing drops (much farther to go), people recognize the mayhem, so what do they do? They want out of the US system, so they send their money oversees. As much as supply of US dollars drops, demand drops even faster. Protectionism leads people out of the US dollar. 400 billion in write-offs due to housing already. Expected to go to 1.6 trillion, so there is more pain to come.

Interest rates in Europe are much higher than in the USA. Because of the negative real rates in US, get your money out. Bernake promises helicopter money. Negative real rates right now are -3.6% (90 day treasuries minus 5% CPI). In 1975, real rates reached -5.7%; in 1980, -7.3%.

If oil is only $5 in US and $10 in Europe, then the US Dollar Index has to drop at least another 50% to make oil on par between both regions. The right thing for US to do is to raise interest rates to counter inflation. But that is not going to happen. Inflation today is turning into stagflation already. Obama's wife is Muslim and people question Obama being a Christian; after all, he married a Muslim. If the Republican party wins, they will just keep pumping the money, and keep interest rates down like Japan did in its similar crisis over 3 decades. Volker, the Fed chairman in the 80's who raised interest rates to counter inflation, advised Obama to do the same, but it won't happen because he won't get elected.

Jim Dines is the guy who predicted uranium would skyrocket. He is saying the US Dollar Index will go to zero. All the ship merchants weep because they can no longer sell their goods to the US. US presently has a 14 trillion dollar economy. Japan comes in second at 5 trillion. GDP will remain low for years to come.

Hubbert's curve for peak oil means oil will be $200 within 5 years. The big idea is oil up and US dollar down. Jim Rogers said avoid the dollar. He predicted oil would go to $100 soon when it was at $50. He said "avoid the dollar at all costs". He said agricultural prices have much more to go over the next decade. Marc Faber said oil can correct so buy gold. He said the Fed will help you not fail, but in the process the Fed will fail. He said global tightening will increase, but USA will not keep pace with that tightening which hurts the US dollar. Warren Buffet is still anti-US dollar. "The Fed is the greatest speculator-It helps investors to speculate".

Ernest Hemingway said: "The first panacea for a mismanaged nation is inflation of the currency; the second is war. Both bring a temporary prosperity; both bring a permanent ruin. But both are the refuge of political and economic opportunists."

Each U.S. citizen's share of the national debt works out, according to the National Debt clock, to $29,947.50. That means the average American family of five owes, collectively, $149,737.50. It also means that unless the average American family of five has a net worth of at least $149,737.50 in assets excluding liabilities (they don't), America is already bankrupt.

The Euro is a relatively small world currency with a great future. More and more countries are considering other currencies besides the US dollar to trade in oil. Iran switched to the Euro in 2003 and with the US invasion of Iraq, United States has temporarily forced Iraq to trade in US dollars again after Sadam switched to Euros in 2003. In 2006, Russia also turned its back on the Dollar. One thing is for sure: the percentage of world trade in currencies attributed to the US Dollar is dropping fast and so are global reserves.

The US Dollar has a long ways to go down still. There will be a moment when central banks have to stop hoarding dollars. The new fad will be central banks using the Euro as the reserve currency instead. It's new and exciting. Despite the Euro's internal problems between the low inflation northern and high inflation southern countries European countries, these are just growing pains. Even Canada has dropped its US foreign reserves by 50% in the past decade and replaced it with the Euro.

everstill
08-11-2008, 12:49 PM
How did the Bible get it so right that the battle of Armageddon would take place in the middle east? They didn't know most of the world's oil was located there.

The falling US Dollar Index will surprise everyone as it resumes its course down, after it reaches 80 or 85, then break down to new lows I am sure. Time and again the Euro will prove itself as the global currency which hurts European exports, but it is not so much the Euro rising as the US dollar falling against most currencies, but still unable to balance its trade deficit. The monthly trade deficit is still over 60 billion dollars.

I think expectations are priced already for a slowing Europe and that rate hikes have stopped, so we should see a new Dollar low by October, and Morgan Stanley has the same sentiment. Interest rates are too low in US and inflation is too high compared to Europe.

Negative real rates are a killer for a currency. Interest rates swap indicate the Euro/Dollar is should be at 1.54, not the current 1.49. All the shorts unwound in the last couple of weeks so positions are flat again. And in the futures markets, commercials are getting to be as short as they ever were.

It's just a matter of time before gold goes over $1000 and the Dollar resumes its down course.

Churchwork
08-15-2008, 01:59 PM
The US has gutted its manufacturing base, so it has almost nothing to export. That's why even though the trade deficit fell to 52 billion last month, when oil shoots up again you will see the trade deficit to get worse again. The US dollar will need to be a lot lower than it is now to start to stimulate exports. Some say though things are bad in US they are not getting that much worse, whereas in Europe they are starting to get bad real fast with more to go. I don't buy that because the debt/gdp in US is still outrageous, the Fed is still printing way more money than the European Union is printing, and the unfunded liabilities of US are far greater. The trade deficit is still over 5% and the world will simply not keeping supporting King Dollar. The hurt of oil is also greater in US than in Europe because US needs 21 million barrels a day whereas Europe needs only 14. With a bottoming here of oil around $110, get ready for a brand new high in the next 24 months. Moreover, the European economy has a larger GDP than US and it is growing wider. A temporary drop 0.5% in GDP is no big deal for Europe compared to US. That might be way too logical for some, but in the end it will be the cause of a further drop in the US dollar. I am convinced Euro rate of 4.25 will remain because Europe wants to keep fighting inflation.

Warrent Buffet said, "The more you owe, the more attractive it becomes to devalue the currency."

Warrent Buffet said, "The US trade deficit is a big threat to the economy more than the consumer debt and federal deficit and could lead to political turnoil".

Warrent Buffet said, "The home mortgage problem is not going away".

Warrent Buffet said, "Money supply growth is over 15%".

Warren Buffet said, "The huge accumulation of dollars overseas (over $7 trillion) is being repatriated as we speak".

Conclusion: Move your money abroad!

Churchwork
08-17-2008, 10:08 PM
http://www.federalreserve.gov/releases/h3/

Check out what happened to the Banking non-borrowed reserves of banking institutions. For the first time in over a half a century they have gone negative and in a big way.

http://www.newyorkfed.org/markets/soma/sysopen_accholdings.html
The Federal reserve at this moment has 473 billion dollars on reserve. Six months ago it was 413 billion. That is a massive increase in money supply.

Churchwork
08-18-2008, 11:36 AM
1. Currency intervention is like being addicted to a controlled substance. Your first experience at the height of the controlled substance produces mind-altering feelings and emotions. From this point forward you require more and more of the controlled substance to reach anything near the first experience. When you fail to get the fix, the pain and/or downer is unbearable.
2. Each subsequent experience of foreign exchange intervention demands more vocalizing and funds. That being said, you have just seen the most success you will see in the Euro via intervention - and thence gold.
3. Eventually it becomes much too expensive to sell a more valuable and appreciating currency in return for fundamentally weak and therefore depreciating dollars.
4. The operation loses capital input because it is the reverse of what central banks in the East wish to be a part of.
5. The operation runs out of capital as one central bank after another uses intervention to covertly unload US treasury instruments into demand.
6. The operation runs out of power as the market senses a wounded strategy. The seven trillion dollar a day turnover in the world dollar market now fades it. That means taking the opposite position to the desired impact of the intervention earlier and earlier in the process.
7. Eventually the operation moves to 75% verbal intervention and 25% capital-driven intervention.
8. As the price of the fade comes in closer, the power of the strategy weakens. The USD troops will move up in price as a secondary line of defense for the ongoing operation.
9. Eventually the strategy fails at that level. This is why you have heard many times that intervention in foreign exchange markets always fails. Intervention in foreign exchange markets never has nor ever will change the trend in any currency.

(Jay Taylor)

Churchwork
09-29-2008, 07:27 PM
Do you think today's drop on the Dow of 777 points (largest point drop in history) is a Biblical signal? Like the 7 seals, 7 trumpets and 7 bowls or that Noah's father Lamech lived 777 years which points to Noah's life as significant.

"As the days of Noah were, so the coming of the Son of Man will be." (Matt. 24.37)

If it is a signal, this is definitely going to bring in the Amero with a dramatic drop in the US Dollar over the coming years.

The Fed will try to keep the stock market up with it's currency.

Nottheworld
10-06-2008, 06:48 PM
‘Twas The Death Of The Dollar' - J. Kent Willis Copyright, October 2008


'Twas the death of the dollar and all through the night
The ill wind that blew filled wise men with fright.
My children stay put, there’s more to the tale
For what’s coming next is beyond the sad pale.
Our friends and our foes could no longer abide
The beggar-thy-neighbor currency slide.
Three horsemen were needed to mount the last ride,
An apocalypse wave came in with the tide.
Trillions of bucks we had sent overseas
Came back with a vengeance no matter our pleas.
“Full faith and credit” were words in the wind,
All lies and no truth was proof that we sinned.
At one time they needed more paper and ink,
Pretending that banknotes had less of a stink.
They no longer used cash and saved a few trees,
Just numbers in space created with ease.
A book entry is fine no matter the claim,
All’s fair in love and ledger-demain!
Tricks of accounting and deft sleight of hand
Repealed all the laws in Consequence Land!

With no questions asked nor answered at length
A low interest rate is the source of our strength.
What good is fake money if it sits on the shelf?
It must be loaned out to both giant and elf.
If there aren’t many takers our plan will collapse,
This whole bloody mess shall fall into our laps!
We’ll pass a few laws and twist tight a few arms,
Our wisdom and skill will protect us from harm.
The man of the hour arose from the ash,
He knew not the difference ‘tween promise and cash.

An ownership class was the cure for all ills,
So McMansions of debt were built on the hills.
To keep the game going they lowered the bar,
A pulse was enough for a house and a car!
Home prices, like fevers, they only go up,
I’ve found the new secret – a bottomless cup!
My house is a bank, I’ll tap it again,
And spend like a sailor besotted with gin.
It matters not if its condo or ranch
Its all sliced and diced and mortgaged by tranche.
They worked out the math and the risk was so low
It’s equal to zero, “Now on with the show!”
Had they bothered to search not far back in the books,
They’d learn this same error killed LTCM crooks.

No rules are needed that get in the way,
The risk is so slight that it just goes away!
Even better the fact is its all sold in pieces,
No big bank gets hurt or covered with feces.
Just lots of small players will take a wee hit,
With losses so tiny they’ll add up to spit!
A derivative here and swap over there
One piece of pie can be endlessly shared!
With commissions for you and a haircut for me
Our magic machine births prosperity!
Then one little hand arose from the pack
What happens, daddy, if they don’t pay it back?
As they shoveled the risks right out the front door,
In through the back came a thousand times more!
An alphabet soup of “assets” arose,
What they had in common was foul to the nose.
Stuffed in your Grandma’s four-oh-one-kay.
These magical potions have now saved the day!
Everyone sought them and bought them in groups
“Follow our lead or you’ll all look like dupes!”
Then captains of cash bought them all a-la-carte,
Bragging to others that they were so smart!
If this one goes up, the others go down,
We’re perfectly hedged, there’s no way to drown!

But titans of old, they crashed and they burned,
‘Tis always the same when lessons aren’t learned.
We studied the crash back in old ’29,
The system collapsed when it should have been fine.
We won’t follow that path by hoarding our cash
By power of law we’ll make treasure from trash.
We’ll open the floodgates of heaven above,
And pour down our paper on hawks and the doves.
Sealing the purse when tragedy strikes
Is like pulling our fingers from thousands of dikes!
With every fresh batch of fake money they gasped:
“Get back to business, the worst has now passed!”
But scarcely another day had gone by,
Another KABOOM, they didn’t know why!

The Big Cheese in Charge appeared on TV
Belching bromides and nonsense for you and for me.
A mountebank here and a humbugger there,
Is all that you need for a really good scare!
When staring full frontal into the abyss
What if our target is wrong and we miss?
If we pull the trigger, we had better be sure,
But how in the world can the cause be the cure?

The vilest request ‘ere made among men
Was packaged as gospel and balm for the sin!
A blank check and power to do as they please,
Free from all laws to spread their disease!
Even tyrants of old never dreamed of such rule,
The one who would grant it is the greater fool!
The sheeple were told there was no other way
No time to debate, we only have days!
They’ll give us whatever we ask of them now,
We’ll take all they have and leave them the Dow!
It’s too hard to goose the NASDAQ my friend,
It’s 5000 point record remained to the end.

Then accountants were given permission to lie,
For speaking the truth would cause business to die!
We can’t make it known what our assets are worth;
It‘ll bring down the heavens and burn up the earth!
It won’t save the day and it wouldn’t be nice,
To not pay the fools their full asking price!
What’s that you say… The cost is too high?
We can’t turn a profit before we all die!
The Jane and John Does were all knocked to the ground,
“We get none of the upside and all of the down!”

`Then builders of cars ponied up to the bar,
Were here for our handouts, now give us what’s ours!
We’ll pretend it’s for research and shiny new knobs,
Not that we’re bankrupt and killing good jobs!
We wondered whoever was next in the line
Begging for cash claiming all was just fine.
The man on the street asked where was his slice
“Share some with me for some beans and some rice!”
The lawmakers bristled and were visibly grieved,
We can’t do it that way, it won’t help out the thieves!
The sad truth was published and worthy of note:
“They gave us fat checks, but you only vote”!
We tried a tax “rebate” a few months before,
You proletariat trash do always want more!
It’s for your own good, you don’t understand,
Don’t stand in the way of the men with the plan!
Our Ivy League sheepskins prove that we are wise
Do you think they bestow them on ignorant guys?
We’ve fancy equations and college class talk,
You’ll be OK, not outlined in chalk!
The law’s on our side, we can do as we please,
Doubting is treason, you’ll be forced on your knees.
They switched on the shredder and in went the doc,
That served us so well ‘till our ship hit the rock.
There’s no point in having a vote and a say
If Executive Order can take it away.

The phone calls and cables were sent by Big Ben:
“Get ready to act as the crisis begins!”
The playbook of old was again passed around,
Force up the buck and drive gold in the ground!
Gas up the choppers and proclaim the great news:
“All tricks in my toolbox I’ll put to good use!”
So they painted a picture, a sore sight for the eye,
Oil dropping like stones and stocks a great buy!
The dollar is king, just look at her go!
A hundred point jump is the start of the show!
Gold and silver are junk, can’t you see they’re not wanted?
Their price action alone proves their rally is stunted!
At first it appeared that the scam was fine work,
Prophets and naysayers were labeled as jerks.
The venerable Dow jumped up on the news,
Then gave it all back, there was much more to lose!
Dizzying swings and swoons were the norm
No moments of peace in the eye of the storm.
The dollar went skyward, a synthetic short squeeze,
As Euro-land banks intervened as they pleased.
But then the Big Truth had outed the lie
There’s nowhere to run and there’s nowhere to hide!
Except to the relics of fame and renown,
The shiny cool stuff that is pulled from the ground!
All by itself it works like a charm,
Intended to shelter My children from harm!
Men with hard money, they had the last laugh,
But nothing is funny with the Dow cut in half!

Even those that still knew that gold was the king,
Sold off their bars for the cash it would bring.
To service their e-debt when brokers had called,
‘Twas folly of margin that killed great and small!
They threw out their babies along with the bath,
And outside their closed banks they started a path!
Peering through windows and what did they see?
The cheap suits and hacks from the F-D-I-C!
If things are just fine, then why are you closed?
Even the dimmest now knew they were hosed!

With coal mines aplenty all filled with foul gas
The alarm system was broken by fiat at last.
The canaries all fled, they knew what was coming,
The Grim Reaper’s afoot and he’s skipping and humming!
He spoke not a word as he harvested kings,
He always appears at the end of bad things.
All who loved paper were gorging on debt,
Until at the last, their Maker they met.
“Why did you not use what I placed in the ground?”
Perfectly suited for trading around!
Born of My wisdom and hard to come by,
Unlike your paper, My money won’t die!

For gold and for silver the price was so high,
A bittersweet truth when there’s nothing to buy.
Unlike the bold Phoenix that rose from the ash
There’s no way to fix such folly-backed cash.
The few that were standing saw clearly the means
To start over again with realistic dreams;
A return to the days when your word is your bond,
And money is good and no one is conned!