This is the scariest image in finance:

Even the Fed Doesn't Want to Hold U.S. Dollars

The above chart shows the dollar’s performance since the Fed announced its Quantitative Easing program. This chart tells us two things:

1.Americans just got 15% poorer on the world stage thanks to Ben Bernanke

2.A currency crisis is in the works (and perhaps already starting)

Regarding #1: When the financial crisis hit, the Fed realized it would need to keep interest rates low while it attempted to bail out the banks (80% of the $200+ trillion in derivatives sitting on commercial banks’ balance sheets are related to interest rates).

The problem with this is that it makes Treasuries very unattractive to foreign investors (China & Japan) who want a higher yield. Consequently, the Fed decided to pick up the slack by buying $300 billion worth of Treasuries through the now famous Quantitative Easing program.

As I noted last week, the Fed is now the largest buyer of US debt (it bought more debt than the next three largest buyers combined in 2Q09). China and Japan are no one’s fools. And they’re not going to fund a monetary policy that is both profligate and likely to erode the value of their dollar holdings.

Which brings us to item #2: the coming dollar crisis.

I am not a huge fan of technical analysis, but it is a useful tool for navigating a trader-heavy, liquidity driven, manipulated market such as today’s. On that note, I want to point out that the dollar began forming a falling bullish wedge pattern starting in June (see above chart). This pattern entails an ever-tightening range of lower highs and lower lows and typically precedes major breakouts to the upside.

Except it didn’t.

As you can see, the dollar broke down out of this pattern in late September. It then rallied back up into the trading range before breaking down again. This is bad news. The next line of support (place where the dollar could bounce) is 76. We've already broken that one too.

seekingalpha.com...

What all this boils down to is the US portrays a poor political image and the lack of fiscal discipline and structure. We have seen how easy the US recession almost caused a global collapse. They tell us we are coming out of this recession. It’s painfully obvious this isn’t the case.

We forget so easily that it was predicted that it would take 4 to 5 years to recover, that things would get worse before they get better.

This recent devaluation of the dollar could eventually cause its demise and send the globe in to total chaos, once AGAIN! Let’s hope this will only be another Great Depression, rather than a duplicate of Zimbabwe.

Then of course we have the Fed having the privately owned Federal Reserve, which in fact controls the economy, interest rates, inflation, deflation, Stagflation or worse yet hyperinflation.. Now they are bagging the buck!

Our US dollar will buy a 7.00 cup of coffee in the EU.

I guess we cant whine anymore about the US dollar being king of global trade anymore, it seems old news.

I have truly tried to keep all my conspiracy theories on this issue at bay. What I see is either Greed or a more sinister plot going on behind closed doors. What will have when we come out on the other side of this?

reply to post by wonderworld


Great OP!
..once again a simple picture is worth a thousand words.

There is only one way this will end up for the US$...and that is badly.

People laugh at the concept of the Amero but considering what's really transpiring, how could it NOT be on the table?

It must be nice to buy your own debt using money you print yourself. I'd enjoy being privy that little scam.

I'd also like to hand out monopoly money and get back tangible wealth plus interest for the privilege of allowing the peasants to buy my pretend dollars.

I thought the Nigerians were the top scam artists but what they do looks like honest work by comparison.

reply to post by wakinup13


Yes I had thought about the Amero, I'm not sure if those SDR's from the IMF would replace all currency? Times are changing fast.

I wonder what the G-20 will come up with, since we seem to trust them to CURE the financial system. I dont expect it to be a capitalist method.

reply to post by ecoparity


You have a good point. I have a site that is constantly bombarded with spam. They are a bit more clever than the Nigerians. Ive traced them to India.

Everyones out to make a buck. I do like the comparison to our local government and Nigerians. I hadnt thought of it that way before.

reply to post by on_yur_6


quote: People laugh at the concept of the Amero but considering what's really transpiring, how could it NOT be on the table?


we canucks will never give up our fuddle-buck.



[edit on 23-10-2009 by bigspud]

reply to post by bigspud


I wouldnt give up your buck either. What is odd is there seems to be an ongoing connection of meetings between

The US, Canada and Mexico since the Bush day to the present. Theyve got something up their sleeve and I think it's more than a north south freeway.

Yeah the dollar is crashing down, it's funny that the frequency of steep downhills is increasing. People where too busy cheering at the dow jones but forgot what was happening to the backbone of the American and mostly world economy.

I'm inclined to believe this is deliberate and planned. I also think that we are about to be shafted in a very unfriendly way. I see more americans moving money into canada all the time.

Originally posted by wonderworld
The US, Canada and Mexico since the Bush day to the present. Theyve got something up their sleeve and I think it's more than a north south freeway.

Umm anyone notice how the current administration spends more time working with the Oposition parties in Canada than the official gov't?

Originally posted by broli
Yeah the dollar is crashing down, it's funny that the frequency of steep downhills is increasing. People where too busy cheering at the dow jones but forgot what was happening to the backbone of the American and mostly world economy.

Funny you should mention that, the dow closed down over 100 points today. Beranke caused that. It was rising too fast. Gravity always wins. They cant keep it above 10,000 for long.

Just in Vegas alone homes have lost more than 50% of their value. You can stay at any 5 star Hotel for pennies on the dollar.

I almost sold some of my gold this week... I am running a tad short on cash in the bank account this month so I decided that $1060 is high enough for me (bought around $700) and that I could sell now and just buy more later since gold is likely to drop again.

Now I am glad I did not. I keep seeing this downward trend in the dollar and it worries me. I re-organized my finances, made a few cuts, and will live with a smaller balance in the account just to minimize how much USD I have. The minute I see a real upward trend in the USD, I will consider selling the gold again. Until then, I will be patient.

I am not sure what the play is, but there is one in the works. The market has been riding this artificial rally all summer and now into fall, and seems resilient to any economic news. Sure, you buy a company stock when they lay staff off and reorg as they will be profitable again after doing so, but you don't buy off of 52-wk highs! I don't get it. The market is WAY overvalued, the dollar is disjointed and keeps falling falling falling, and gold is sitting pretty high.

Fishy.

Originally posted by exile1981
I'm inclined to believe this is deliberate and planned. I also think that we are about to be shafted in a very unfriendly way. I see more americans moving money into canada all the time.

I agree that this was somehow, however complex it may seem, was done deliberatly as well.

Lets play overinflate our nest eggs, then watch it pulled out from under us. From houses, 401K's, stocks, etc. Everything goes up and never comes down.

We have seen gravity take hold. Why were they ignoring this? They all cant play stupid.

It's a good set up for the new reform that will soon take place.

reply to post by exile1981



That’s a good point about mingling with Canada’s opposition. I hadn’t actually thought about that lately.

The same goes for the archaeologist in Mexico and the reason for the visit there, as well but that opens another can of worms.

reply to post by nydsdan


I had that same thought about cashing in on the gold and silver commodities and also decided not to sell. Silver is also up at around 17 or so. I bought when it was low too.

Many think that Physical gold is less attractive than gold stock. I personally feel it is like a hassle to tote around and takes up space but like the saying goes it’s a heavy parachute to carry around but will save your life when you need it.

Originally posted by wonderworld

It's a good set up for the new reform that will soon take place.

You mean the new rules on owning Gold, or the new rules on private ownership or fining people with no health care or too much health care?

Originally posted by wonderworld


The same goes for the archaeologist in Mexico and the reason for the visit there, as well but that opens another can of worms.

Ok do tell? What visit? I think I missed a conspiracy.

Originally posted by exile1981

Originally posted by wonderworld


The same goes for the archaeologist in Mexico and the reason for the visit there, as well but that opens another can of worms.

Ok do tell? What visit? I think I missed a conspiracy.

Well It's been awhile so I'll give it my best shot.

Obama goes to Mexico for some unknown reason. He decides to visit an famous Mexican Archeologist. From my own research I found strange and unusual things at his museum that were UFO related.

I don’t know if this is what Obama went to see? I think the archeologist died the next day after shaking hands with Obama. Shortly after the Swine flu came about.

Most were worried for Obama’s safety, yet he never caught the flu.

I only suspect the nature of this visit had to new with NAFTA. It would take a lot of explaining but that’s it in a nutshell.

There was never a follow up or autopsy that I'm aware of. The timing is a bit concerning.

Originally posted by exile1981

Originally posted by wonderworld

It's a good set up for the new reform that will soon take place.

You mean the new rules on owning Gold, or the new rules on private ownership or fining people with no health care or too much health care?

No I wasnt really addressing the healthcare bill, which would be astronomical, or the value of gold persay.

That’s a heavy question. I didn’t exactly major in economics. I just know enough.

What I meant was mostly the global plan for recovery and reform.. More like international economics; although Timmy Geithner decided to tackle the stock market and hedge funds.

I agree Hedge funds are to blame for a lot of this mess but the S&P shouldn’t be messed with. I truly don’t know what to expect.

On Bloomberg this morning they said they are making the banks shore up a LOT more capital. I believe some of this is being driven by the last G-20 meeting.

I see it as another sign of trouble, as most investors did today.

Sister-formation to OP Bullish Falling Wedge.

[atsimg]http://files.abovetopsecret.com/images/member/7785ad7a34ce.jpg[/atsimg]

Lots of negatives in this chart. Failing upside momentum , big gap to the 200dma....not to mention several failed attempts this month to push through the top of the formation at the October 08 breakdown point...1099-ish.

In a free market I might even call for a rapid decline & retest of the March Lows should this pattern resolve to the downside soon , but with Fed market meddling , and another round of stimulus in the pipeline....maybe a 10-20% correction.