The Us Dollar Is Major Trouble

[Scott Sando]

The US Dollar is MAJOR Trouble

Submitted by Phoenix Capital Research on 02/01/2011 23:18 -0500

GermanyHead and ShouldersReality

Earlier today I wrote a piece forecasting the end of the Euro. At that time, I speculated that the Euro would be broken up within the next year.Then I looked at the US Dollar’s chart.

I've said before that the US Dollar was in BIG trouble... but as of tonight, it's on DEFCON 1 RED ALERT TROUBLE.

As the below chart shows, the greenback needs to rally and rally hard if we’re not going to head into a SERIOUS collapse shortly.

What you're looking at is the US Dollar right on its multi-year trendline. If we take this out now, then we are heading into an inflationary death spiral in very short order.

Indeed, once we take out this line, we're just a few ticks away from triggering the MASSIVE Head and Shoulders pattern the greenback has formed over the last 20 years.

In case you're wondering, this pattern has an ultimate target of 40... a full 50% lower than where the US Dollar is today.

We're talking about hyper-inflation on an order that would make Weimar Germany proud. And if we break the green line above, we're THAT much closer to this becoming a reality.

In plain terms, the end game is fast approaching if not already here. I've long thought the US Dollar had one last rally in it, but looking at the charts tonight I could very likely be wrong.

Indeed, inflation is already exploding worldwide, which means paper money in general is going to be worth less and less on its way to worthless.

If you think the US is immune to this situation, you're in for a very RUDE surprise in the coming months. Indeed, the Fed’s Hoenic just announced there might even be QE 3… and he’s supposed to be one of the Fed HAWKS!

The writing on the wall is clear: the Fed will stop at nothing to destroy the US Dollar in order to prop up the Big Banks. The 308 million of us who don’t work on Wall Street are all going to be thrown under the bus. Don’t let it happen. Take steps now to prepare yourself for what’s to come.

Good Investing!

Graham Summers

Full article with charts here

The dollar doesn't look too happy and with the pound at 1.62 our manufacturing going too take a hit, best start the printing press Merv, its a race to the bottom.

[Realistbear]

The dollar doesn't look too happy and with the pound at 1.62 our manufacturing going too take a hit, best start the printing press Merv, its a race to the bottom.

US policy at the moment. They are still trying to get China to devalue which they are not going to do as they are dependent on cheap exports.

The pound will remain high until such time as our economy feels the pain of a HPC which will be accompanied by massive unemployment (15% plus).

Sterling is up against all the majors again today:

GBP to USD 1.6194 +0.0008

GBP to EUR 1.1738 +0.0013

GBP to JPY 132.5036 +0.4913

GBP to TRY 2.5778 +0.0228

GBP to THB 49.9873 +0.0426

[dryrot]

US policy at the moment. They are still trying to get China to devalue which they are not going to do as they are dependent on cheap exports.

Devalue?? Quite the opposite, no?

[The Ayatollah Buggeri]

Devalue?? Quite the opposite, no?

If he means the opposite, i.e. allow the value of the RMB to rise, then to a certain extent this'll happen by default as the USD falls against other major currencies in that it'll be cheaper for the US to import from elsewhere in the world, thereby reducing the artificial advantage China is giving itself with the fixed exchange rate.

[The Masked Tulip]

The US is follwoing a policy of devaluing its own currency in order to try and break the Chinese peg. This might go on for some time.

Who will blink first - China or the US?

[leicestersq]

The US is follwoing a policy of devaluing its own currency in order to try and break the Chinese peg. This might go on for some time.

Who will blink first - China or the US?

From that recent outburst of printing by the Liffey, I would say that the Irish were blinking first.

[The Masked Tulip]

From that recent outburst of printing by the Liffey, I would say that the Irish were blinking first.

It is immaterial what any other currency does - Sterling included.

This is an economic war between the US and China to determine who is top dog. The other currencies are just reactive to what the US Buck is doing.

The US is basically saying "WE will keep on printing and devaluing until you, China, de-peg from the Dollar" and China appears to be sticking two fingers up at that.

[Bloo Loo]

It is immaterial what any other currency does - Sterling included.

This is an economic war between the US and China to determine who is top dog. The other currencies are just reactive to what the US Buck is doing.

The US is basically saying "WE will keep on printing and devaluing until you, China, de-peg from the Dollar" and China appears to be sticking two fingers up at that.

so they inpoverish the World to beat the Chinese.

Why not just have tarrifs on CHinese imports into the US.

We could all get on with eating then.

Of course, there seems to be some sadistic pleasure being gotten by those in Charge in the US.

[ralphmalph]

It is immaterial what any other currency does - Sterling included.

This is an economic war between the US and China to determine who is top dog. The other currencies are just reactive to what the US Buck is doing.

The US is basically saying "WE will keep on printing and devaluing until you, China, de-peg from the Dollar" and China appears to be sticking two fingers up at that.

Bernankes plan is food and petrol inflation in the emerging markets and China to force up labour costs and transportation costs so that American goods become more competitive.

Yum brands announced today that there labour costs in China have risen 35% in a year. Whilst no where near western levels yet add in 100 dollar oil to ship goods to the US and there is a competitive rebalancing in terms of costs going on.

As to how China responds just raising interest rates will not work because more hot QE money flows in and it can be just left there in cash earning 10% so the big question is what can China do. They have to burn the investors with QE money that is flooding there economy, that means a stonger renimbi to cause loses on exchange rates.

Interesting times ahead.

[The Masked Tulip]

so they inpoverish the World to beat the Chinese.

Basically, yes.

At the end of the Second World War a US Senator sat down and wrote a doctrine that is still adhered to to this very day - that the US would dominate the World economically and militarily taking whatever action was in its own best interests to secure 90% of the World's resources.

Putting tariffs on goods coming into the US is not good enough. It would not stop China selling to everyone else.

I think it is only a matter of time before trade barriers go up though but I suspect we will see some kind of US/EU trade barriers being enforced jointly.

Down this road in 1945 the Germans came... but the start of that road was decades earlier. We are all on a journey now.

[Deckard]

Bernankes plan is food and petrol inflation in the emerging markets and China to force up labour costs and transportation costs so that American goods become more competitive.

Yum brands announced today that there labour costs in China have risen 35% in a year. Whilst no where near western levels yet add in 100 dollar oil to ship goods to the US and there is a competitive rebalancing in terms of costs going on.

As to how China responds just raising interest rates will not work because more hot QE money flows in and it can be just left there in cash earning 10% so the big question is what can China do. They have to burn the investors with QE money that is flooding there economy, that means a stonger renimbi to cause loses on exchange rates.

Interesting times ahead.

Interesting indeed.

Good read on China just out on ZH.

Niels Jensen Asks If Plunging Chinese Power Output Is Indicative Of A "Dramatic Economic Slowdown"

[leicestersq]

Bernankes plan is food and petrol inflation in the emerging markets and China to force up labour costs and transportation costs so that American goods become more competitive.

Yum brands announced today that there labour costs in China have risen 35% in a year. Whilst no where near western levels yet add in 100 dollar oil to ship goods to the US and there is a competitive rebalancing in terms of costs going on.

As to how China responds just raising interest rates will not work because more hot QE money flows in and it can be just left there in cash earning 10% so the big question is what can China do. They have to burn the investors with QE money that is flooding there economy, that means a stonger renimbi to cause loses on exchange rates.

Interesting times ahead.

I dont know if it is Bernanke's plan or whether or not he is the one carrying it out. It is a good plan. A bit like when a vampire (China) is sucking out so much blood (money) that you will die unless you put some more blood in your system. The Americans can produce as much blood as they like though, and are putting it back into their system. That will keep flooding into the vampire just so long as it can keep the pressure lower on its side of the mouth.

Of course this cannot go on forever. Hyper-inflation will rear its ugly head in China before long if they keep biting. And if they do stop this nonsense, then their currency will appreciate rapidly until there is no general cost advantage to produce things in China, though of course some things will be more economic to produce there. Then it gets interesting, with a printing press on full, all that printed US money no longer gets clogged in the Chinese central bank, but gets rebounded into the US economy. They will experience inflation until the get the printing press off and the budget balanced. Good luck with the latter.

[Scott Sando]

'The Economic Collapse
Feb 3, 2011

In a shocking new interview, Donald Trump has gone farther than he ever has before in discussing a potential economic collapse in America. Using phrases such as “you’re going to pay $25 for a loaf of bread pretty soon” and “we could end up being another Egypt”, Trump explained to Newsmax that he is incredibly concerned about the direction our economy is headed. Whatever you may think of Donald Trump on a personal level, it is undeniable that he has been extremely successful in business. As one of the most prominent businessmen in America, he is absolutely horrified about what is happening to this nation. In fact, he is so disturbed about the direction that this country is heading that he is seriously considering running for president in 2012. But whether he decides to run in 2012 or not, what Trump is now saying about the U.S. economy should be a huge wake up call for all of us.

Trump says that the U.S. government is broke, that all of our jobs are being shipped overseas, that other nations are heavily taking advantage of us and that the value of the U.S. dollar is being destroyed. The following interview with Trump was originally posted on Newsmax and it is really worth watching….

Now, you may or may not think much of Donald Trump as a politician, but when a businessman of his caliber starts using apocalyptic language to describe where the U.S. economy is headed perhaps we should all pay attention.

The following are 12 key quotes that were pulled out of Trump’s new interview along with some facts and statistics that show that what Trump is saying is really happening.

#1 “If oil prices are allowed to inflate and keep inflating, if the dollar keeps going down in value, I think there’s a very distinct possibility that things could get worse.”

Donald Trump is exactly right – we are headed for big trouble if we continue to allow the Federal Reserve to pump hundreds of billions of new dollars into the system.' Edited February 3, 2011 by Scott Sando

[Deckard]

Whatever you may think of Donald Trump on a personal level, it is undeniable that he has been extremely successful in business. As one of the most prominent businessmen in America, he is absolutely horrified about what is happening to this nation.

Yep. Works well for Berlusconi - and for Italy

[Guest sillybear2]

It is immaterial what any other currency does - Sterling included.

This is an economic war between the US and China to determine who is top dog. The other currencies are just reactive to what the US Buck is doing.

The US is basically saying "WE will keep on printing and devaluing until you, China, de-peg from the Dollar" and China appears to be sticking two fingers up at that.

China will simply import huge amounts of inflation, domestic prices will rise and people will demand higher wages, they end up becoming less competitive, basically the same outcome as dropping the peg. Their mercantilism is like mutually assured destruction.

“The dollar is our currency, but your problem"

As for the serial bankrupt Trump on his high horse, did he manage to compensate anyone for his latest tower of babel?

Edited February 3, 2011 by sillybear2

[Scott Sando]

Oil is going to $150 to $200 a barrel.

[R K]

I can barely believe that anyone could look at that dollar chart and call imminent hyperinflation.

Seriously, it boggles the mind, even given that it's on a gold bug site. But really fellas stay off the Coca Cola.

[Constable]

I can barely believe that anyone could look at that dollar chart and call imminent hyperinflation.

Seriously, it boggles the mind, even given that it's on a gold bug site. But really fellas stay off the Coca Cola.

You don't generally get too much warning about a hyperinflation.

How Hyperinflation Will Happen In America

[leicestersq]

I can barely believe that anyone could look at that dollar chart and call imminent hyperinflation.

Seriously, it boggles the mind, even given that it's on a gold bug site. But really fellas stay off the Coca Cola.

What you miss is that all those dollars that are being printed, are being sucked by the Chinese and a few other central banks, in an effort to depress their own currencies. This works to an extent, and keeps exports competitive. Trouble is it makes those goods so cheap, that there is an excess of demand for them, which eventually causes inflation in China and other countries. You dont get much dollar inflation.

If theY were to float the Renminbi, then all of those inflationary pressures in China are lifted, but not dissipated. Instead they will move location, and that will be back to the US. Hyper-inflation could be caused if that high inflation were added to by China and others dumping their dollar holdings, particularly if they were worried that the US could not repay its debt.

Now whether or not we get hyper-inflation in the UK is another thing. We really ought to be trying to avoid it, as hyper-inflation makes it difficult to trade as the value of everything being traded changes when the cost is denominated in a hyper-inflating currency. Avoiding that hyper-inflation means being brave, raising interest rates and balancing the budget. Cant see that happening.

Edited February 3, 2011 by leicestersq

[Scott Sando]

Normalcy bias

The normalcy bias refers to a mental state people enter when facing a disaster. It causes people to underestimate both the possibility of a disaster occurring and its possible effects. This often results in situations where people fail to adequately prepare for a disaster, and on a larger scale, the failure of the government to include the populace in its disaster preparations. The assumption that is made in the case of the normalcy bias is that since a disaster never has occurred that it never will occur. It also results in the inability of people to cope with a disaster once it occurs. People with a normalcy bias have difficulties reacting to something they have not experienced before. People also tend to interpret warnings in the most optimistic way possible, seizing on any ambiguities to infer a less serious situation.

[Realistbear]

It is immaterial what any other currency does - Sterling included.

This is an economic war between the US and China to determine who is top dog. The other currencies are just reactive to what the US Buck is doing.

The US is basically saying "WE will keep on printing and devaluing until you, China, de-peg from the Dollar" and China appears to be sticking two fingers up at that.

+1

In the meantime, it is in US interests to try to push the Euro much higher than where it is today to keep German goods expensive.

Sterling will remain strong all the time the Bond markets see that the Koalishon are successful in rebuilding the economy. So far, at least as far as the traders are concerned, they get an A+. If the Koalishon continue to show success £ may continue to rise far above current levels as the world marvels at how easily the debt problem has been contained.

The miracle Brown began may well continue.

Edited February 3, 2011 by Realistbear

[Scott Sando]

You don't generally get too much warning about a hyperinflation.

How Hyperinflation Will Happen In America

"This is something hyperinflationist-skeptics never quite seem to grasp: In hyperinflation, asset prices don’t skyrocket—they collapse, both nominally and in relation to consumable commodities. A $300,000 house falls to $60,000 or less, or better yet, 50 ounces of silver—because in a hyperinflationist episode, a house is worthless, whereas 50 bits of silver can actually buy you stuff you might need."

I really liked that quote, now there's a HPC

[Xurbia]

China will simply import huge amounts of inflation, domestic prices will rise and people will demand higher wages, they end up becoming less competitive, basically the same outcome as dropping the peg. Their mercantilism is like mutually assured destruction.

“The dollar is our currency, but your problem"

As for the serial bankrupt Trump on his high horse, did he manage to compensate anyone for his latest tower of babel?

I totally agree with you about the pompous Trump. His rich daddy bailed him out. He's no better than Lehman.

His daughter is equally as boring:

In the book, the 27-year-old real estate mogul writes about what she has learned from her privileged upbringing and offers advice to young women on how to focus at work, negotiate with conviction and passion and how to thrive in uncertainty. “We’ve all been dealt a winning hand,” Ivanka writes, “and it is up to each of us to play it right and smart."

Yep, we've all been dealt a winning hand Ivanka. I bet she would be a real estate mogul even she'd been born into a different family. Let them eat cake.

[leicestersq]

"This is something hyperinflationist-skeptics never quite seem to grasp: In hyperinflation, asset prices don’t skyrocket—they collapse, both nominally and in relation to consumable commodities. A $300,000 house falls to $60,000 or less, or better yet, 50 ounces of silver—because in a hyperinflationist episode, a house is worthless, whereas 50 bits of silver can actually buy you stuff you might need."

I really liked that quote, now there's a HPC

I remember reading about the French retreat from Moscow in 1812. Prices changed on that march, you couldnt buy a loaf of bread for a bar of silver. Soldiers ended up throwing them away as they were weighed down by them.

Prices of everything can go up and down to extremes.

[ralphmalph]

I remember reading about the French retreat from Moscow in 1812. Prices changed on that march, you couldnt buy a loaf of bread for a bar of silver. Soldiers ended up throwing them away as they were weighed down by them.

Prices of everything can go up and down to extremes.

Is this the first "Buy Guns call on hpc."