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The Fallacy Of US Dollar "Strength"
Submitted by Alasdair Macleod via GoldMoney.com,
You'd think that the US dollar has suddenly become strong, and the chart below of the other three major currencies appears to confirm it.
The US dollar is the risk-free currency for international accounting, because it is the currency on which all the others are based. And it is clear that three months ago dollar exchange rates against the three currencies shown began to strengthen notably.
However, each of the currencies in the chart has its own specific problems driving it weaker. The yen is the embodiment of financial kamikaze, with the Abe government destroying it through debasement as a cover-up for a budget deficit that is beyond its control. The pound had been poleaxed by the Scotish independence campaign, plus an ongoing deferral of interest rate expectations. And the euro sports negative deposit rates in the belief they will cure the Eurozone's gathering slump, which if it develops unchecked will threaten the stability of Europe's banks.
So far this has been mainly a race to the bottom, with the dollar on the side-lines. The US economy, which is officially due to recover (as it has been expected to every year from 2008) looks like it's still going nowhere. Indeed, if you apply a more realistic deflator than the one that is officially calculated, there is a strong argument that the US has never recovered since the Lehman crisis.
This is the context in which we must judge what currencies are doing. And there is an interpretation which is very worrying: we may be seeing the beginnings of a major flight out of other currencies into the dollar. This is a risk because the global currency complex is based on a floating dollar standard and has been since President Nixon ended the Bretton Woods agreement in 1971. It has led to a growing accumulation of currency and credit everywhere that ultimately could become unstable. The relationship between the dollar and other currencies is captured vividly in the illustration below.
The gearing of total world money and credit on today's monetary base is forty times, but this is after a rapid expansion of the Fed's balance sheet in recent years. Compared with the Fed's monetary base before the Lehman crisis, world money is now nearly 180 times geared, which leaves very little room for continuing stability.
It may be too early to say this inverse pyramid is toppling over, because it is not yet fully confirmed by money flows between bond markets. However in the last few days Eurozone government bond yields have started rising. So far it can be argued that they have been over-valued and a correction is overdue. But if this new trend is fuelled by international banks liquidating non-US bond positions we will certainly have a problem.
We can be sure that central bankers are following the situation closely. Nearly all economic and monetary theorists since the 1930s have been preoccupied with preventing self-feeding monetary contractions, which in current times will be signalled by a flight into the dollar. The cure when this happens is obvious to them: just issue more dollars. This can be easily done by extending currency swaps between central banks and by coordinating currency intervention, rather than new rounds of plain old QE.
So far market traders appear to have been assuming the dollar is strong for less defined reasons, marking down key commodities and gold as a result. However, the relationship between the dollar, currencies and bond yields needs watching as they may be beginning to signal something more serious is afoot.
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The Canadian Looney also getting monkey hammered.
But the Ukrainian currency is getting the Fed's full Con-fidence and support.
Commodities are getting creamed. Corn price looks really bad. Lots of debts won't get paid on the mega farms if this continues.
It looks like the corn really is getting creamed.
Fuck those megafarms anyway. I get much more variety out of my own garden than they would provide me with.
I'm with you 100% Vaquero; GMO corn, soybean do not get my mouth salivating.....
"Looney."
Funny, I was at Knott's Berry Farm and they had some kind of Wild West Show where they made fun of the Canadian "looney."
I wonder how many people in the audience realized that the Canadian "looney" was worth more than a USD?
Not many.
The ignorant are just asking to be enslaved in a language they do NOT understand.
Uhhh, No.
1 usd=1.09 Canadian DollarMeasured against Cigarettes, the USD keeps falling.
In George Orwell's 1984 the weekly tobacco ration is 100 grams - try affording that on minimum wage.
Orwell was quite generous to minions in his book. The practice we live in is harsh.
Garbahje.
The dollar is heading higher, relative to other fiats, because QE is ending and rates MAY start to climb in the States. They sure as hell will not be allowed to rise in the EU or Japan. No great mystery. Just the best looking horse in the glue factory.
Hooray Beer!
exactly
USD is the least pungent of all other currencies including the wan/juan/yuan or however you spell it
which is pegged to the dollar, so what's with the happy horse apples about it becoming, in short order, a reserve currency.
The volk who have them can't wait to get invested in something else, even if it's Vancouver crack houses.
Let us count the ways the USD is like an investment into a Vancouver Crack House. Seems like a good string to point out my mental problem with Western banking System.
Why all this competition between Currencies everyday? Why not wait 12 months to re-evaluate the value of each currency.
What is the USE of the Competition each day between Alpha-Males to reset prices and prove themselves to have a cult of personality?
The Theory that only exposure to Con Artist in Banking, Mafia on Wall Street, and Cunts in London... setting the best prices for anything is fallacious. You trust an Alpha She-wolf or He-Wolf not to con you & the system?
All Currencies and Countries have weakness.
Total US Debt
http://research.stlouisfed.org/fred2/series/TCMDO ($59.398 T Exponential Growth, All Sectors; Credit Market Instruments; Liability, Level)
Total Federal Debt
http://research.stlouisfed.org/fred2/series/GFDEBTN (Total Federal Debt $17.6 TN)
Some Economist, Statisticians, Bankers say US Debt is between $127 Trillion & $200 Trillion, but what is real GDP more like $12 Trillion in Value Created, and obviously we can't trust Government to tell us where the Money is flowing from QE & TARP & Federal Reserve Loan Programs.
Foreign Owned Assets
Here is a look at Exponential Growth (2004-2008) of Foreign Owned Assets in the USA from the Department of Commerce.
http://www.bea.gov/newsreleases/international/intinv/iip_glance.htm ($26 Trillion foreign compared to $22 for US) (Yeah, Bankers also sell our US Assets, sell our debt to foreigners)
http://research.stlouisfed.org/fred2/series/ROWFDN... ($3.16 Foreign Investment USA out performs US Bankers)
http://research.stlouisfed.org/fred2/series/GPDI ($2.69 Private Domestic Investment)
Consumer Credit
http://research.stlouisfed.org/fred2/series/HCCSDODNS $3.148 Trillion Households and Nonprofit Organizations; Consumer Credit; Liability, Level
**Tell me another one. Having a US Central Bank is Crucial to keeping Federal Debt Levels in "Check" and preventing "moral hazard"...BAHAHAHAHAH!!!!!@%$#&@***
*Time to Reinvent Banking Paradigms and throw out the old inflexible bankers that have taken our freedom*
***Reform the US Banking System*** ***End the FED*** ***Bring bank GAAP Rules, Standardized Financial Instruments, Financial Ratings with Integrity, and True Independent Auditing in Government & Business***
More generally, take power away from the psychopaths. The entire system is a con. But shut down the con, at this point, and what's left?
Seriously, people talk about Ending The Fed without much consideration for the ramifications. How many people own their homes outright? How many people have zero net debt and savings outside the zeroes-and-ones fake banking system? If your plastic stopped working, how would you propose to pay for groceries? Most people have nothing in their pockets but lint. The nation has been stripped of real wealth like a car in a bad neighborhood. But the media would have us believe our greatest threat is ISIL. What a god damned joke.
Perhaps its time that the responsible savers, debt free people, paid off mortgage home owners, got some justice. Held off on the vacations, toys, home refinancing for pools etc. Got the 3 B's. No new car every couple of years. Retired and planned to have fixed income but the FED killed this plan. So fuck the FED and all the jerks that may suffer with just pocket lint to their names. The warning was there for years - live by plastic, die by plastic!
That's exactly the way you're supposed to feel. "Every man for himself" = "Divide and Conquer."
Yeah, USD is down indexed to the 12/31/2012. Weak dollar should increase the price of gold, instead we get a closing price of AU on 12/31/2012 of $1,676. So we're down in the neighborhood of $500 or 30% today, even through the dollar is weaker. Man is this a fucked up and manipulated market/economy/currency.
That "value" of 30% just went into stocks instead since then. The next time the counterfeit exits stocks, maybe it goes back into gold? /wink
King Dollar was Bottoming in 2008.
That is Crystal Clear Today, but Quite the Contrary then.
The Dollar didn't Collapse then, and is NOT Going to.
To Act on that Belief with your Capital is to Bet that America is going to Fail; it Will Not.
The "Graphic" above and others like it Prove the Point according to its Own Figures:
Total World Money 155,370*
Global Shadow Banking 75,000*
Foreign CCY/Deposits 67,000*
US Bank Deposits 8660*
Monetary Base 3840
* NONE OF THE ABOVE GUARANTEED,
NOR SUPERIOR TO US TREASURY BILLS IN ANY LEGAL CLAIM
How Many US Bills Outstanding ?
So Simple.
Trillions, Not Billlions will be Lost by Current Rentiers
at ALL LEVELS.
CLAIMS, NOT MONEY.....John Adams explained the Problem and the Ignorance...
re: "NOR SUPERIOR TO US TREASURY BILLS IN ANY LEGAL CLAIM"
According to whom, and when, and under which set of laws?
To continue the thread... in agreement that USD & US Treasuries have much weakness:
It is not a Conspiracy that USD & Treasuries are weak:
- CYA Paradigm means that Janet, Ben, Alan, Timmothy, Henry, Robert Rubin, Lloyde Blankfein, Bush, Cheney, Wolfowitz, Kennith Lay, Jon Corzine, CNBC, FOXNEWS, CNN, USATODAY, Mary Schipiro, Eric Holder, Lannie Breur, Phil Gramm, Lindsey Graham, John McCain, Corker, ... and 1/2 million government workers, officials, and DoD Personnel all are complicit and covering up the true state of the union
- CYA an "American Tradition" since 2001... mean we have no free press, no safety inspectors, no legitimate regulatory agencies to inspect terrorist attacks... wait that one goes much further back
- No One has Yet made the "American Tradition" MOVIE about US Corruption... but the idea has been out there and generating ideas and financial support
It seems:
- Business is Conspiracy in USA
- Politics is Conspiracy in USA
- All Politics is Conspiracy
- All Politics is Fraud & Propaganda
- All Public Issues are Politics
- All Media is Conspiracy
- All Media engages in Politics & Fraud
- All Media & Politics is lead by "PR" Companies & Propaganda Plans
- All Wars are lead by "PR" and Propaganda Companies
- All Finance is organized around Spying, Inside info, controlling national governments (or the powers), and about committing conspiracy in hiding pertinent info & data about the specific business transactions
Liverfailure-
Might wanna familiarize yourself with the new normal vote counting system...
King Dollar, "King Dollar was Bottoming in 2008".
If I was a conservative banker I would try to argue that you are overlooking money velocity, Real US Growth, Components of Government GDP figures, Real US Labor Participation Rate, and decline of AVG US Wages....
http://research.stlouisfed.org/fred2/series/M1
http://research.stlouisfed.org/fred2/series/M2
http://research.stlouisfed.org/fred2/series/MZM
Looks like 1981 was the Money Velocity high, note manufacturing plunged 1979.
http://research.stlouisfed.org/fred2/series/M1V (Top was 2007 Q4 at 10.7, now down to 6.3)
http://research.stlouisfed.org/fred2/series/M2V (Top was 1997 Q3 at 2.2, now down to 1.5)
http://research.stlouisfed.org/fred2/series/MZMV (Top was 1981 Q1 at 3.5, now down to 1.4)
http://research.stlouisfed.org/fred2/series/Mult (Top was January 1987 at 3.1, now down to .7)
http://research.stlouisfed.org/fred2/series/MANEMP (Employees: Manufacturing 12.1 M Persons)
http://research.stlouisfed.org/fred2/series/CIVPART 62% labor participation supposedly down from 67%
**There is no doubt USA is in decline in Economic Power and Financial Condition**
**There is little debate that US is counting rent seeking behavior as GDP**
**There is no debate about whether US Industries are declining in many sectors including Hollywood, Music, Manufacturing, computer production, information processing, engineering...although I see strength in US Engineering & High Tech Manufacturing.** Plus Retail is down in shops, malls, Anchor Stores.
Plenty of weakness in USD.
***Conclude: Top was 1981 OR 1987.***
Wonder how much Global debt is owed to Monsanto? Anybody? Probably has a financial arm I am not aware of.
On the Fallacy of USD:
- Stagnant Economy has already restructured, so there is little spending or Investment
- Currency Collapse would shock into Inflation
- FED & Prime Dealer probably can buy up US Treasuries to prevent a shock in that sell off (But I am not a Banker)
- Oil Crisis or Commodity Crisis could shock us into Inflation, but not sure safety measures in place
- Banker "Mind Control" seems to be the real reason that USD has strength and Loyalty
- Germany & Europe & Latin American can't come after US for their Gold since USA is the Military & Financial Superpower, same dynamic ensures countries buy US Treasuries & USES US Petrol Dollar (But I'm not a Banker)
- US Military Assets are spread over the world, makes it hard to do a preemptive or huge attack to take out significant piece of our military power
- Financial Attacks combined with Telecommunications Attacks would seem most likely to success in bringing down the USD (But I don't know shit)
The only way the global economy avoids cascading default and comes back into balance is if G3 currencies weaken substantially against RMB and the only seem stable way to do that is through gold reflation of real assets with respect to financial assets.
Endgame.
When do the slanty eyed motherfuckers in Asia start slamming the gold price. I need to take a dump.
Sexual relations with ones mother is very unusual here in Asia.
Presumably, if PRC, China, BOC, are getting low prices on Gold... You would think they would appreciate the low prices... while creating new institutions that would fairly value "Gold" in the Future.
Okay, but... the only benefit is not to Indian People planning weddings or common Chinese people... the only benefit is to Central Banks Globally that have already stocked up on "Gold".
This would indicate that gold price would remain low till the Russian, China, BRICS had secured their Gold Reserves. And perhaps shows why Ecuador would send Gold to USA as a sign of Neutrality in this show down.
***China is all about Control, Clearly they gain advantage in attracting all loose gold for a decade or so at a lower price as they ramp up productivity.***
Did you know that blueberries are related to azaleas, camellias, heathers, and rhododendrons?
Where have you been?
We need more comic relief.
LOL.
The fact is the dollar is Moonshoting...but for various reasons most of which have only been reported and discussed upon here at the hedge. Fukushima is one (handled by CNN's weatherman)..another good one is Ukraine.
Ebola, ISIL...you name it...only here. "Can't spread fear into the general population" and "that's why no one should believe a single thing coming from the hedge."
Fact of the matter is facts matter here...whereas your only qualification for being large and in charge on the tele is by being a first class psycho.
So sure...this article is total bullshit. But what isn't total bullshit is this being the worst recovery in the post World War II era.
This has consequences that are readily observed even by a complete idiot. Ironically this has made those who are prima facie wrong even more idiotic.
Needless to say that only encourages a "doubling down" on the Terror State...with that Terror directly aimed at the American people and their currency (and their freedoms...of course.)
Apparently being a Christian isn't a good idea either.
The dollar has just begin to take off as this EW analysis shows. Dollar strength has just begun and will surprise everyone in the next few months at just how strong it will become.
http://www.globaldeflationnews.com/category/stocks/usdollar-charts/
WTF?
Ever heard of cost comparison in 1975 dollars, 1982 dollars, 2005 dollars?
The inference being that 'older' dollars had greater purchasing power than the diluted debt coupons available today.
Wake up and smell the shiny, you tool.
On US Treasury Bills:
US Treasury Bills are the FIRST and Direct Claim on the Incoming Revenue of the United States.
That Sum in ONE YEAR is Much Greater than the TOTAL of US Treasury Bills Outstanding.
The TOTAL Sum of US Treasury Bills Outstanding is a Mere Fraction of GDP.
No Ecumbrances Exist Against US Treasury Bills. No Malfeasance or Loss Possible.
EVERYTHING else is a CLAIM, Subject to Infinite Variations, but Not TRUE MONEY.
These are The Facts.
The Only Way US Treasury Bills FAIL is if the USA Fails.
If that were to Happen, Caveat Emptor:
YOUR "RIGHTS" AND PROPERTY EXIST ONLY TO EXTENT OF
THE GOVERNMENTS WILLINGNESS AND/OR ABILITY TO ENFORCE THOSE RIGHTS.
But America is Not Going to Fail.
Legend; you are a legend in your own mind.
You have been brain washed by your comrades of the USSA. It is clearly "Mind Control".
"The TOTAL Sum of US Treasury Bills Outstanding is a Mere Fraction of GDP."
- I'd tease you about this myth, but many government workers and citizens believe this
dig Deeper to what GDP is supposed to be. GDP is supposed to represent value added to the Economy in a single year. The problem I see is that if you turn over a house or some assets at a higher price that is GDP Growth. So how else can we fake the GDP by making transactions and pulling fees or percentages off of the increase in value? You can dig into me on this and maybe I'll learn something...
- you know that Official Inflation Numbers only serve the Government & Cost of Living Increases for Pensions, right? Okay, there is no way we can increase pensions each year by 5% each year, we have to keep these numbers low for Social Security and pension growth (conservative idea).
- But Inflation occurs in places we don't like to look: Private Executive Compensation, Public Executive Compensation, gasoline Prices, Energy Prices, Mortgages, Contract prices for Federal Government Projects like Highways, Bridges, dams, Infrastructure, Proliferation of DoD Contracts & the Value of Contracts, Employment of Prison Employees, Federal Payments to Communications Companies, and the loss of US wages & US Jobs goes on to Social Programs & Welfare (this is Inflation)... what about Corporate Welfare, Subsidies for Corporations, Tax Abatements for Corporations, Loan Guarantees for Corporations from Federal Government, Farm Subsidies, New Federal Contracts for PMIC & Privatization of Federal Government Functions including Mail & Express Mail.
**Conclude: US Treasuries = fabricated GDP Total valued at $17 Trillion... but actually value added to US Economy has been flat & shrinking as 50% of People gain employment from Federal Contracts. Say $12 Trillion GDP to $17.7 Trillion in US Treasuries**
Total US Debt
http://research.stlouisfed.org/fred2/series/TCMDO ($59.398 T Exponential Growth, All Sectors; Credit Market Instruments; Liability, Level)
Total Federal Debt
http://research.stlouisfed.org/fred2/series/GFDEBTN (Total Federal Debt $17.6 TN)
No Ecumbrances Exist Against US Treasury Bills. No Malfeasance or Loss Possible.
Absolutely true, if measured in US Dollars.
Self-referencing logic works because self-referencing logic works because...
When the head of America has monumentally bad judgement, as Obama does, failure is always a posibility. Fortunately, he only has 2 more years.
Says who?
Everything fails at some point... Looking at the last couple of decades, I see failure.
Actually I see the US in default three times since 1930s first with dollar devluation from 20 to 35 USD per once on Gold. Next in the 1970s where Nixon defaults on Gold obligation and now Bernanke and Yellen defaulting on the USD denominated debts by money printing.
Where have you been in the last couple of decades? Watching CNN I presume....
How does the "gearing" math work?
I get the first step
3,840/870 = 4.4
and the last step
155,370/870= 178
But then I get lost.
3,840 / 870 = 4.4
(8,660 + 3,840) / 870 = 14
(67,000 + 8,660 + 3,840) / 870 = 91
(75,000 + 67,000 + 8,660 + 3,840) / 870 = 178
I don't know why he's dividing by the old monetary base (870), it's a thing of the past. To do it right, you should have 2 pyramids, one with the old monetary base and old bank deposits, etc., and one with the new monetary base with new figures for bank deposits, etc.
And why does he call it a pyramid, as though that is somehow pathological? Logically, the total world money supply must dwarf the us monetary base. so what's his point?
More interesting would the changes by categories since 2008 - which in the case of the US monetary base are dramatic - what is causing them and how they will end. But that's not his focus.
+1
"Guillotine the Fed!"
An American guillotine owner, not US subject.
I am not too sure about how many will be needed. I am thinking of steam power driven with mechanical disposal of dismembered heads and bodies.
Enjoy...
https://www.youtube.com/watch?v=v9GJPoMs30E
https://www.youtube.com/watch?v=lo5BBHtn4tM
and it will continue to rise. there goes gold...
Not really. The weight and purity will remain constant... I promise. No promises about the dollar however.
The corn will taste as sweet at half the price, too.
Every now and then a very notable and important event occurs, sometimes it slips by without even being noticed. For months the major world currencies have traded in a narrow range as if held in limbo by some great force. This has allowed people to think we were on sound footing as central banks across the world continued to print and pump out money chasing the "ever elusive growth" that always appears to be just around the corner.
Weak demand for goods and most of this money flowing into intangible investments inflation has not been a major problem, but the seeds for its future growth have been planted everywhere. John Maynard Keynes said By a continuing process of inflation, government can confiscate, secretly and unobserved, an important part of the wealth of their citizens.
While there are not many Bond Vigilantes there are a slew of Currency Vigilantes and they are ready to make their presence known. Weakness in the value of the Yen, Pound, and Euro must not go unnoticed. More on why this may be a signal that currency trading is about to get very wild in the article below.
http://brucewilds.blogspot.com/2014/09/caution-alert-currencies-may-get-...
Your article makes an interesting argument for Japan being the first nation to experience hyperinflation, but not the last. However, there is an easy way for a country to avoid hyperinflation - just default on the debt, don't monetize it. Declare national bankruptcy and live within a balanced budget. Why not?
Price discovery is dead across all paper assets in debt ridden economies that provide provide no real economic flexibility and straitjacketed within bankster dominated markets. From this core, shall come more rigs.
There is no connection of bond prices or whatever with currencies. In fact, no coneects with one paper over any other. You trade just with digits moving across screens and cut out the noises of economic/market spins including this article.
No system is available as yet for US$ to be replaced as a global medium of exchange. Mistaking US$ or any other as store of value is asinine. Store of value lies in a diversified base of physicals including gold where their real prices can only be discovered out of any underground economy that has yet to emerge in full.
I think of it this way.
What would I do if I had a net worth of $1bn.
Well fist it will not be in cash . That's just ponzi fiat crap, almost all of it will be in stocks and most likely almost all of it will be in stocks in my own company.
All fucking worthless and I would know best because I own that juiced up sub-prime shit I spent billions on buying back in the never ending stock buy back sprees.
So i need to sell this shit, ans I need to dump hundreds of millions of this junk onto retards who know no better,
without crashing the fucking thing completely.
So I get me an expert, someone who can pay it out, understands the interplays and buys counterbalancing stocks as these are dumped, effectively switching values in to a higher rated stock that will rise cos the FED has its back.
All good so far, but now need to start thing what to do with this tsunami of cash pouring in. I cant keep it in the fucking bank, they will soon have a chunk of change from that and the ponzi fiat is likely to crash anyway from this fucking bubble its in.
No I need to get out of $ and into something with a much better fundamental, but that rules out almost everywhere except a few minor currencies, and paper, whatever it says on it, whoever stuck their fucking stamp on it is just that, fucking paper.
I need assets as the cash come in , something that holds value no matter what, or at least will not crash as much as the fiat ponzi paper shitpile.
House, Already have half a dozen all costing over $10 mill fucking running costs to take into account. No upside there.
Private jet, Yeah that could be a starter, not some poxi little Lear jet but maybe a full blown luxury fitted out A380 or 747. There is always some silly fuckers buying or leasing new big jets.
that's $150 mill
Another boat, no, i already have 2 and they cost a fucking arm and a leg.
Commodities, Well its got to be in food, or gold.
Food is no good on paper, it needs to be food you can fucking eat and food that isnt going to rot away.
Corn oil and rice.
That is what the world lives on when there is fuck all else to eat. and when the ponzi shit devalues that shit goes up in price.
Sorted, Just need to buy some heavily guarded warehouses in the most likely countries to face food riots.
Maybe I could play the markets in Greece or Spain and start to corner the market in oil and rice, or maybe Thailand, just to get things moving along.
Hmmm
Must ask GS how many people need to starve and how much it will cost me to hold a big play in the local markets to drive the local price up enough to start a full blown revolution.
you're thinking it wrong
Land. You, Mr. Billionaire, would be buying up agricultural land, like the other billionaires are currently doing. You don't buy commodities, you buy what commodities are made from. And the commodity that everyone needs and always will is food.