Here's what a Canadian Dollar would cost you over the years, priced in American dollars.
Long-Term
Mid-Term
Short-Term
Dollar's decline may prompt joint intervention, Morgan Stanley says
"The natural economic mechanisms that should, in theory, have helped halt the dollar sell-off were not, in fact, usually strong enough," the Morgan Stanley analysts said. "This is why multilateral interventions were usually required to facilitate the re-alignments of exchange rates."
- The dollar falls.
- Oil rises (priced in dollars).
- The stock market rises (priced in dollars).
- Pain increases (wages not going up as fast as dollar falls).
- Uncertainty increases (as you stare at these charts).
- Housing inventory increases (even as dollars become worth less).
- The economy weakens.
- Lather.
- Rinse.
- Repeat.
Like gold, U.S. dollars have value only to the extent that they are strictly limited in supply. But the U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost. By increasing the number of U.S. dollars in circulation, or even by credibly threatening to do so, the U.S. government can also reduce the value of a dollar in terms of goods and services, which is equivalent to raising the prices in dollars of those goods and services. We conclude that, under a paper-money system, a determined government can always generate higher spending and hence positive inflation. - Ben Bernanke, November 21, 2002
Our government is clearly one of the more determined governments. Hurray!
Source Data:
FRB: Foreign Exchange Rates
Our government is clearly one of the more determined governments.
ReplyDeleteNo Kidding. LOL
Mark that dog I had didn't make it, major bummer. I took some off the table on the gold stocks so maybe I'll enough to pay the vet bill. Bummer but it could have been worse.
Dollar still looks oversold to me, gold and oil look overbought but I don't know what it will take to get a rally going in the dollar either. Wait and see and take profits along the way and hope we don't get a flat out colapse of the dollar as my profits would vanish. OMG Bummer.
Kevin
Kevin,
ReplyDeleteI'm really sorry to hear that your dog didn't make it.
Seems like more BS, slathered on nice and thick. Talk about the desirability of a strong dollar even as you continue the liquidity pump to the tune of hundreds of billions of dollars while cutting interest rates. Then, when the dollar tanks, get some suit-dweeb "expert" to comment that "The decline might continue "unless it's stopped," ..., because trade and investment flows rarely offset large currency moves." Ahhh, riiight. Why don't they just say "Pay no attention to the man behind the curtain." I know, reduce sarcasm.
ReplyDeleteWhat will Ben do.
ReplyDeleteBloomberg talks about $105 oil next week like it's nothing. WTF?
What excuse for oil hitting another high will the MSM have for us tomorrow? More bad weather? EID blew up a tanker in Iraq? Threat on Saudi fields? Iran? Hugo?
They will blame it on anything but the "Almighty Dollar".
One sign of hope........
Mishkin said the Fed must be ready to reverse course and raise rates to combat inflation!!!!!
But will Heli-Ben listen?
Here in NH residents are already applying for heat assistance. It just hit upper 30's the other nite.....dang it's gonna be a long winter.
Like your views. It's amazing how so many are in the dark and have no clue.
kwark,
ReplyDeleteI just wish the analysts were always wrong, then we could simply do the opposite and make tons of money!
Instead, all we get is a bit of high paid biased randomness. Like that's suppoed to help! ;)
mark d,
ReplyDeleteThanks for the comments.
It's amazing how so many are in the dark and have no clue.
I'm in the dark, lol.
Are we...
1. At the end stages of a commodity bubble that is just about to burst, and thereby preparing to usher in a new wave of recessionary anti-prosperity? (Gold went parabolic before the 1980 recession for instance.)
2. At the beginning stages of a currency crisis that continues to go parabolic, and thereby ushering in a new wave of hyperinflationary anti-prosperity? (Gold went parabolic and never looked back in Zimbabwe.)
Hold on, I sense a common theme! Maybe I'll only be in the dark literally. Sweet!
In other news, I have an interesting tidbit of anecdotal trivia. When people are unemployed (like my girlfriend) they use more energy (heat) when they are home. Go figure.