Fed Chairman Yellen and the Coming Dollar Crisis

Phoenix Capital Research's picture

 

Janet Yellen will be the new Fed Chairman come January 2014.

 

Yellen is the head of the San Francisco Fed. There is a lot of misinformation about her on the web, but the fact of the matter is that she is a career academic with absolutely zero banking experience or business experience.

 

This puts her in the same boat as Greenspan and Bernanke. Indeed, the only Fed Chairman we’ve had in 50 odd years with any banking experience is Paul Volcker.

 

With that in mind, it’s important to note that Yellen has been one of the biggest proponents of QE as a monetary policy. In 2011, she stated that QE 1 and QE 2 would create a total of the million new jobs by the end of 2012. Suffice to say, the woman does not understand monetary policy or economics as they pertain to the real world.

 

And she will likely inherit a US Dollar crisis.

 

The US Dollar is preparing to stage a significant breakdown. The uptrend that has been in place since 2011 has already been broke (blue line) and we has already broken key support (black line) briefly last month.

 

 

The Fed’s $85 billion per month QE 3 and QE 4 programs are very anti-Dollar. However, on the opposite end of the global currency see-saw is the Euro which comprises 56% of the US Dollar index.

 

A lower Dollar means a higher Euro. A higher Euro hurts European exports (over 50% of Germany’s economy is export driven). So QE could very well force the ECB to act to push down the Euro. This dynamic will fuel much of the monetary issues of the Yellen-Fed era.

 

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Best Regards,

 

Phoenix Capital Research