US dollar gaining strength at an astonishing rate

[Slew Foot]

Its not so much that the USD is gaining strength, as it is that the rest of the world is realizing that their financial systems are in the same boat as the US and they see the USD as a safe haven.

 

[First]

Yup, RPB's get it wrong on economics continually. Peter Schiff, Sep. 2007: "The dollar will lose half it's value by next year". Since then, it has gained 7%+. Peter Schiff has specifically stated, when asked "What if the dollar starts rising this year" during the coming recession, and he immediately states over and over "It just can't happen!!". Sure.

These dudes get it wrong, again. What else is new?

EDIT: Schiff compares U.S. dollars to Zimbabwe. Hyperbole FTW!

 

[Napalm]

Originally posted by: digiram
Great news...I can't wait to party in T.O. again.

Good man!!

 

[her209]

Originally posted by: Slew Foot
Its not so much that the USD is gaining strength, as it is that the rest of the world is realizing that their financial systems are in the same boat as the US and they see the USD as a safe haven.

Except the USD is weaker compared to the Yen.

 

[Napalm]

Originally posted by: Moonbeam

Originally posted by: LegendKiller

Originally posted by: halik
Long term this trend is sure to reverse, given our budget and CA deficits, but hey right now we're doing better than europe!

I don't think you'll see a huge fall relative to most major currencies. Why? Because everybody is in the same boat. The only reason why the dollar fell as fast as it did was because investors thought the US was delinked from the world economically, that the Fed was taking unilateral actions that no other major central bank would have to take, and that was hurting the dollar.

However, once reality set in that the US is *NOT* delinked from the world, that this problem is one of ALL major countries, not just directly through US investments, but also that the credit spree went on in every country (Canada had their own ABCP problem stemming from extendable ABCP, Spain with their own housing bubble, Germany, France, England, Australia, Italy...etc).

The only currency to really strengthen against the dollar was the Yen, but only that because the unwinding of the carry trade.

After people realized that every major CB would take the same actions as the Fed, there was a rationalization. Europe went into recession faster and deeper and will probably take many more years to get out of it than the US. The CAD went down so quickly because oil has dropped in price, making the alberta sands less attractive, not to mention that the rest of Canada's economy is natural resource driven, all of which is dropping in demand as the world enters recession.

Everybody has to keep in mind that currency valuation is a relative valuation, a low tide will lower all boats.

Personally, I love the fools who thought gold would keep going higher. It's such a stupid assumption that I am sure gold traders are loving all of the fools. You can't eat gold, you can't drink gold, you can't pay your car loan in gold. Gold was already over-valued during the commodity bubble, to think it'd keep going higher, outside of any rationalized demand driven price, is just stupid.

Same thing with oil.

Where are the RPBs now? Isn't monetary "inflation" supposed to be sinking the dollar, driving massive inflation, driving demand for commodities, and leading us into Mad Max Beyond Thunderdrome?

RPB knowledge of real-world economics is about as laughable as Palins knowledge of international diplomacy. Just because they can read blogs, and she can see Russia, doesn't mean jack shit when it comes down to reality.

I think you are being too rational. Gold is indeed totally useless and worthless, but so is great art. People are irrational animals, like birds that pick up pretty pieces of colored items to decorate their nests. Gold affects the psyche of man in an inexplicable and irrational way. Gold bars just bring this sense of satisfaction to heft in your hand. The love of gold is somehow, I think, organic, maybe because it's the color of the sun.

Do you type to hear your own keystrokes?

 

[GroundMeat]

The customer is always right. Given that the American consumer is the most powerful economic force on the planet everyone is going to bend over backwards to please them (us).

As much as I hate to make the argument to clients everything is relative. If everyone is going down the tube good ole USA will be the last one down and the first one up and that's going to be the case for a long time, that's why the dollar is gaining strength. So long as we keep a debt to GDP ratio that is perceived as safer/superior to everyone else all is good.

As LK said "we produce 14TR worth of stuff" no one else does that, and it's going to take a long time for anyone to get close to that.

 

[LegendKiller]

Originally posted by: her209

Originally posted by: Slew Foot
Its not so much that the USD is gaining strength, as it is that the rest of the world is realizing that their financial systems are in the same boat as the US and they see the USD as a safe haven.

Except the USD is weaker compared to the Yen.

It should have always been at this level, except for the yen carry it would have been.