Churchwork
07-27-2008, 11:16 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.
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.