Dollar looses big chunk of value

I just checked a chart for the Dollar Index for the last 60 days...
Check this out, it's quite scary because the other markets are not reflecting this at all.

[atsimg]http://files.abovetopsecret.com/images/member/2591f7d5fe22.png[/atsimg]

Check it out for yourself here:
www.fxstreet.com...

The last time it was this low was April of last year when it hit 71'ish

Will it go lower?

reply to post by warrenb


They're printing money to buy bonds, and probably stocks , too. This is why I think the US govt. didn't choose to directly bail out states.

The general public watches the stock market not exchange rates. As you have posted before there is a problem with the gold markets.

China looks like a big looser in all this. The US is passing some law giving the govt. control of all water in the US. Maybe in the future the water you drink will be Chinese water.

Correct me if I'm wrong but devaluing of the American dollar is a good thing then you can start exporting goods again instead of importing them "So am I missing something?"

[edit on 10-9-2009 by MOTT the HOOPLE]

The dollar has been doing the opposite of the stock market for a very long time. When the stock market goes down, the dollar rises. When the stock market rises, the dollar falls. But this makes perfect sense! A weaker dollar means stocks should in theory go up in price due to inflation. A strengthening dollar means stocks should go down due to deflation. So you could say the data does reflect this.

But I am wondering if the US dollar is on the verge of a breakdown to a new low. If that does happen, I think commodities markets will then start to break in a manner that causes extreme levels of inflation, which in turn will tear the US economy to shreds at a surprisingly fast pace.

I've been reading into the commodities markets. Food is becoming a serious issue. I would strongly recommend people start stocking up on food. Sugar and soybeans are becoming scarce already, but that is expected by at least a few experts both to get worse and spread to other markets.

The $one quadrillion derivatives market is a house of cards that could easily and violently implode into dust in very little time. Silver and soybeans are both taking off in price which suggests inflation may begin at any time. But then again the collapse of banks could ward off that inflation and even cause a period of deflation. Its all a big stack of dynamite and predicting the way it will explode is pretty tough.

reply to post by warrenb


Wow you are on a roll today warrenb!!! Great stuff . dollars down ,golds up, I can't belive people not on ATS or other sites like this aren't talking about any of this. Guess most folks are wondering if they will still have a gig a few months from noww. I remember hearing that in the late 70's and early 80's inflation was rampent in argintina,chile etc, insted of bullion or coins people bought items they could barter.

You know how to beat inflation? Invest in the s&p500.

It's up 56% since March. That more than makes up for the decline in the value of the dollar. Does it not?

Originally posted by MOTT the HOOPLE
Correct me if I'm wrong but devaluing of the American dollar is a good thing then you can start exporting goods again instead of importing them "So am I missing something?"

[edit on 10-9-2009 by MOTT the HOOPLE]

You are completly right. Thats why these conspiracy theories of economic collapse are wrong. Any recession that would develop from a drop in the dollar would be offset by an increase in foreign investment (lets say Germans come to US to buy goods because their Euros buy more since dollar goes down, that helps businesses) and increased exports.

If anything I'd say this devaluation of the dollar is a long over due correction. The dollar is artifically inflated because of China's practice of buying dollars in order to deflate its own currency. As a result, this is not an end of the world scenerio but rather a market correction.

Originally posted by cynic121
Any recession that would develop from a drop in the dollar would be offset by an increase in foreign investment (lets say Germans come to US to buy goods because their Euros buy more since dollar goes down, that helps businesses) and increased exports.

Buy what? Most German products are superior to the Yanks'. So the dollar has to be really low for them to be able to buy anything. Besides, most US goods are made in China.

reply to post by MOTT the HOOPLE


Yes, indeed you are missing something.

First of all, let me start by explaining what the U.S. Dollar Index is. It is an index or measure of the United States dollar relative to a basket of foreign currencies. That basket contains the Euro, Japanese Yen, Pound Sterling, Canadian Dollar, Swedish Krona, and Swiss Franc.

The dollar can lose its value relative to other currencies by having a lower interest rate. Every time the Federal Reserve lowers interest rates to spur our economy, the dollar becomes less attractive relative to other currencies that have higher interest rates.

If the dollar loses its value internationally, that does not affect the purchase price of goods produced in the United States. It DOES, however, affect the price of imported goods from Japan, Europe, etc. Since most of what we buy is produced abroad, this causes a reduction in buying power for the U.S. consumer.

A weak dollar can be troublesome, especially when our national account deficit is so large. We have to sell our debt to keep the country running, because our government spends over a billion dollars a day more than it receives in the form of taxes. We "sell" our debt to whoever will buy it, and pay interest to the buyers or holders.

If the dollar resumes its slide, and our interest rates are low, our debt becomes less attractive to foreign governments. If they won't buy our debt, what do we do? The Fed will simply print more money and then buy it right back. In other words, the Fed prints the debt instruments, and then buys them itself, increasing the supply of dollars. They are simply running the printing presses to pay the bills. More and more of our debt is being monetized (or bought back by the Fed), which results in more and more dollars in circulation, which weakens our currency. This means that dollars are worth less, and buy less.

So what do we do to profit from this opportunity? Gold, precious metals, and commodities are the answer. Gold has historically moved inverse to the U.S. Dollar Index and if the dollar begins to slide once a gain, gold could explode higher.

We see gold not only benefiting from a weak dollar, but a general lack of faith in currencies worldwide as the economic malaise continues to deepen. Imagine the appreciation in the price of gold if the world governments wanted to hold gold reserves instead of reserves in U.S. dollars, Euros, or any other currency.

This also opens the door for commodity inflation as weakening currencies are used to purchase tangible goods, such as oil, corn, wheat, etc. We believe there is still time to get on board with this trade and we have not rushed in. However, we plan to begin building positions in these areas to the extent we are allowed by our current investment policies.

intrustadvisors.blogspot.com...

Originally posted by MOTT the HOOPLE
Correct me if I'm wrong but devaluing of the American dollar is a good thing then you can start exporting goods again instead of importing them "So am I missing something?"

[edit on 10-9-2009 by MOTT the HOOPLE]

Yes, you are missing out on being paid abysmal wages like a third world country. Fear not though, the US government is working on that, and soon you will have lots of work producing lots of stuff for the world
"man, why are loaves of bread costing $100.00 each?"
"SILENCE SLA...*ahem* VALuable citizen, You are being paid more that ever before, look at all the zeros on your paycheck. Now work harder, we have a big order to fill today"

Originally posted by MOTT the HOOPLE
Correct me if I'm wrong but devaluing of the American dollar is a good thing then you can start exporting goods again instead of importing them "So am I missing something?"

[edit on 10-9-2009 by MOTT the HOOPLE]

Sure. Wanna pay $138.95 for a loaf of bread? How about $223.56 for milk? A gallon of gas? Fogettaboutit!

By the way, I love "Good man in a bad time."