Dollar Cremation Resumes

Tyler Durden's picture

Just as Bob Pisani was getting giddy that for probably the second time in 2011 the dollar went up in concert with the Russell 2000, here comes reality washing over the true value of the world's most hated reserve currency, and forcing the DXY to drop to yesterday's lows, which incidentally are just pennies away from multi year lows. Should the Yen resume its strength forcing the BOJ et G7 to intervene again (just as ineffectively), look for the DXY to promptly take out all lows as the Bernank once again goes to the front of the currency devaluation race.

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DutchTreat's picture

I love the smell of burning US dollars in the morning. It smells like VictorEU.

Moric's picture

hmmm I can't seem to find the EU in "burning Us dollars"...

Mercury's picture

DXY = Euro 57.6%
Japanese Yen 13.6%
British Pound 11.9%
Canadian$ 9.1%
Swedish Krona 4.2%
Swiss Franc 3.6%

Harlequin001's picture

Realistically now, how low can it go?

Harlequin001's picture

No chance, at least not yet.

I'm still not seeing anything to convince me that this is anything other than a well managed manipulation of a currency, and the same for gold and silver.

The Dollar was maintained far too high through the Asian currency pegs for far too long and needs to fall.

But I don't get the feeling this is anything other than a well managed revaluation of this currency by all CB's as yet.


LoneCapitalist's picture

Here are some sugestions for you. Try doing some research on; state bugdets, federal budgets, medicare & medicaid projections, and social security projections. That should convince you.

Harlequin001's picture

so what's to stop you printing all the money you need?

Doubleguns's picture

Your kidding right!! Think Weimar, wheelburrows and Zimbabwe.

LoneCapitalist's picture

Nothing. The problem is, the more you print the less valuable it is. Thats the death spiral and as far as Im concerned we are already in it.

Harlequin001's picture

I don't think you've taken into account all the CB's collective options. Wiemar never had a sovereign fund or two to bail it out, Bernanke does.

I know what you're saying, and whilst I don't agree with what he, King, Trichet or any of the others are doing I don't for an instant think Bernanke is a bit thick either. They will have thought of this and devised something that they think makes this different.

Must have, no one's that stupid.

D.M.'s picture

Not to mention ALL the central banks are printing like crazy, not just the Fed. IMO the goal is global goverment with one currency, or global war.

Harlequin001's picture

DM I'm not seeing anything that would convince me there is any conspiracy or global goal, just a bunch of half wit politicos who will always take the easier 'least painful in the short term' route.

We could well see an attempt at a global currency and you could argue that we already have with SDR's, but I don't see it, and to be honest I don't think we need it. I think the CB's have ample room as yet to manipulate both markets and currencies and I hate to say it, PM's too.

Why isn't gold flying? We've just had a scale 9 earthquake followed by a 30 foot tsunami which resulted in a virtual wipe out of the worlds second largest economy in a full on nuclear meltdown. Why is the economy not all going pear shaped as we speak?  Who is buying all these treasuries?

I don't see enough pressure in this system despite what I read here to tell me that this is the end of the line, which it ordinarily should be.

I see a future in which the entire productive capacity of the palnet can be less than the interest cost of all outstanding global debt and still the global economy can survive... in theory anyway. But I believe long before we reach that point the peeps will have had enough and the economy will fall apart.

And good riddance too if you ask me.

Global war is the likely outcome...because you can't stop people being stupid, and you can't stop wankers promising what they can't provide, like an acceptable achievable solution to an underlying problem of too many people.

and there we have another can of worms...


D.M.'s picture

Why should global government and currency even be considered a conspiracy? Its the next logical step in extending the ponzi scheme. Even more consolidation of power and wealth.

Harlequin001's picture

If you say 'Its the next logical step in extending the ponzi scheme' I'm inclined to agree with you...

But I'm not sure about the consolidation of power and wealth bit.

10kby2k's picture

When the US Fed changes rates its just a matter of time before most CB's around the world follow suit.  The difference in yield curves between US and EU are small. Monkey see, monkey do.  EU threatening to raise rates to 1.00%  LOL  not much difference between 1.00 and 0.25.   Its not a conspiracy......they don't have to be covert.

Harlequin001's picture

zero possibility of them raising rates anytime soon if you ask me...

faustian bargain's picture

Is this the same Bernanke who didn't foresee the housing collapse, who insists there's no inflation, and who says the revolutions happening overseas have nothing to do with the Fed's monetary policy?

I have trouble believing everything is going all according to his 'plan'.

Harlequin001's picture

Not for an instant do I think he didn't see this coming. If you and I can work it out I'm sure he can too.

Bernanke did what he had to do at the time, sweet talk the markets and try to minimise the damage, and it nearly failed if I remember rightly.

How can anybody believe that Greenspan didn't see it coming, he even had the gall to call his book the Age of fucking turbulence. These guys know exactly what they're doing and to underestimate them will in my view prove very expensive. These guys knew exactly what was going on in the Goldman and JPM Board room if you ask me, must have done to have repealed Glas Steagall and staved off any regulation of derivatives for the banks.

You should not underestimate the man, or his cohorts.They exist to ensure that government deficits are funded, so does the FDIC, CFTC and the SEC. You are about to find out that they are not on your side, never were.

I buy gold, but I buy it for the long term with little or no expectation of any short term monster gain. Slow and steady and onward and upward, so to speak.

The Fonz's picture

Well its not a matter of stupid or smart really.  For instance imagine living in the top of a tower that was always being built. This tower posess these qualitys: It is more stable when it is growing and it can no longer stay upright if it does not grow. You have no way out of the tower and if it falls you die.  If the only way out is death sooner or death later, you might keep building the tower, this would be "smart" and utterly doomed to failure.

Our tower is made of fiat money.

Further, a large portion of the poeple managing the other 3,800 failed fiat systems were probably pretty clever too, didn't help.

economessed's picture

That's what I'm going to tell the IRS this year.  Stop shaking me down for money when the Bernank can print all you need.  Seriously. 

cossack55's picture

Who was it who said, "All paper currencies are destined to return to their intrinsic value....nothing".  Probably paraphrasing here, but history proves all fiats are worthless. Without exception.

Harlequin001's picture

I'm not aware that history has ever seen a significant number of CB's conspire to manipulate all currencies collectively.

Under a gold standard it's simple and very fast but this failure could go on for some time.

Whilst I do believe that calamity ultimately awaits,
I am not sure we are anywhere near the end as yet.

NumberNone's picture

Agreed.  All the CB's are in on the game.  Bernank can do whatever he wants as there is no CB in the world to call bullshit on his actions.  All have a blood pact to live by the ponzi or die by the ponzi.  Timeline for failure has yet to be determined.

Harlequin001's picture

I think we're singing from the same song sheet here, but my view is that this is far from near any collapse, and we haven't seen any real intervention from Sovereign funds yet...

Doubleguns's picture

Collapse comes when faith in paper money comes. Seems to be happening faster as we go along. Look at the price of silver this week. The only reason fiat has value is because people believe it has value based on faith in the govt. That's not holding up to well in my book. Look at the anonymous letter posted on ZH today. The cracks are everywhere and when it goes it could be very fast.

Harlequin001's picture

Guys, your all looking at this as if it's another Wiemar, where we had largely many economies on a stable or semi stable footing and one government off on one printing money.

Yes the adjustment was very fast and accelerated but that is not the case here. Now we have many economies all screwed, so there is nothing to devalue against other than PM's in my view.

But we also have leverage through fractional reserve that turns $  bilion of fiat into maybe $9 billion of subsequent demand when its invested in a bank as capital, so every dollar printed can result in at least twice the demand for the original debt with plenty left over for manipulation.

Let's not forget that Wiemar didn't have a booming derivatives market either, Bernanke does...

I don't disagree with the sentiment here but I do suggest that this might not play out as many seem to expect.

This will be a fail, but it will be a long drawn out on in my view...and this is not it.

jesusfreakinco's picture


FWIW - I agree.  The charade will go on much longer than most people suspsect.  I am in my early 40s so I have only articles to read to understand the end of the BW agreement.  However, I suspect that many thought the USD would collapse shortly thereafter. 

Happy to be in PMs and will continue to trade with my fiat for awhile for 'gains' (aka the anti-dollar delfation) and try to convert more and more into tangible assets.

I hope you and I are right or I'll end up with a lot of worthless fiat if they USD devalues overnight...  We shall see.

Harlequin001's picture

Jesusfreakinco, They will definitely devalue the dollar. That was a requirement of the currency pegging era. The problem is that all the Asian economies are geared up for manufacturing for export, and they can't afford to let that happen.

If we'd been on a gold standard these imbalances would not have crept in in the first place, but now they are so large that turmoil is inevitable. Nobody can afford that turmoil, and nobody wants it either, which is why I say that this is unlikely to be a Wiemar and more of a long drawn out pull.

It could all go badly wrong and a real jerk could well happen, and so to that end I stay well away from equities and any derivatives because you never know the quality of your trade.

But if you understand what a sovereign fund is and how it works, we could be many years off a full blown failure. You could well see two tier economy before this ends, one for corporate and banking and the other more of a black market for little folk, but ultimately the formula is still a monster fail.

I know with PM's I can't lose if I hold it properly and away from the derivatives business, and away from the tax man, but yes, let's hope we're right.  Personally think I'm well positioned either way.

RockyRacoon's picture

What are those sovereign funds composed of?        U. S. Treasuries.

You got a supposedly rich pool but it's backed by hot air.   Don't depend upon these funds to have any clout when TSHTF.   In fact, the material to feed the fan could come from here.

Harlequin001's picture

Rocky, we know that but it doesn't matter. They've been backed by hot air since dot but they haven't collapsed yet.

China can simply print a few billion new Yuan, buy a US T and pledge it as collateral to a European bank for liquidity through its swf.

Through that mechanism they can create demand for anything in either US dollars or Euros or any other currency for that matter and if they lose half in a US or Portuguese collapse for example, they simply print another few billion Yuan, buy another US T and replenish their collateral with the European bank - and hold the bonds to maturity. Technically it's infinite. No need for any default, anywhere.

Apply that to the derivatives market and PM look like your still getting what your given and no more...

d_senti's picture

You're saying that there's nothing to devalue against other than PM's, which is true in a monetary context, but it applies equally well to all commodities. You have all CBs increasing the amount of fiat cash in the system, yet the raw materials and finished products are remaining constant or declining. As such, the dollar/yuan/euro printing leads to price inflation (also known as inflation) regardless of their relatively stable value compared to each other.

What does it matter that you can exchange $1.50 for 1 euro in a few years, so long as it costs $1000 dollars to fill your gas tank or buy groceries? That being said, "the market can remain irrational longer than you can remain solvent." I agree that the Bernank has some sort of escape plan, but it will fail.

You can't fight the markets. You really can't. That's the greatest fallacy, in my mind, of Keynesianism. You can stall trends at most, but it will go where it wants to go. Weimar can't happen here, specifically, but some variation of the same thing can.

economessed's picture

Why wait until the collapse is evident (it will happen with amazing speed once we cross that point).  Why not opt-out now?  Convert those FRNs to other stores of value.

Harlequin001's picture

FYI economessed, I started investing in gold in 2002. Right now, apart form maybe less than 10% in gold mining equities I only hold physical gold and silver, and not through an ETF... and have done for the last 5 years.

paddy0761's picture



François-Marie Arouet (Voltaire): "Paper money eventually returns to its intrinsic value -- zero".





cossack55's picture

Thanks Paddy. The old gray matter isn't what it once may have been.

savagegoose's picture

was prob greenspan when he was a good guy.

egdeh orez's picture

When is Ron Paul going to do something?

Or is this all a show?  Yawn.

Harlequin001's picture

We're too far down the road for Ron Paul to do much at all I think.

What would he hope to achieve, and what would be the impact on society?

Nightmare, and ultimately unavoidable, but nightmare nonetheless...

Larry Darrell's picture

Rand Paul was on the local radio show this morning.

He said 2 things:

1)  I will not run for the presidential nomination if my father runs.

2)  There are options we are exploring if my father decides not to run.

John Law Lives's picture

Ron Paul and Rand Paul seem like sincere people.  They essentially have zero chance of getting the GOP nomination.  No way will the GOP nominate people like them.

StychoKiller's picture

Better question:  How many challengers will Obamatron face in 2012?  At least one:  Alan Grayson.


Verstehen's picture

What can Ron Paul do? He is drowning in a sea of Keynesian economics. We must play this until the end. Its the way democracies work. Nothing and nobody can break away until the collapse comes.