Richard Russell~~~~~~~~~~~~~~~
"...Question - Russell, what do you mean, a "synthetic short" against the dollar?
Answer - To carry debt, to pay off debt in the US you need dollars. The US public, the cities, the counties, the states, the corporations, the government - they're all loaded up to their eyeballs with debt. To carry or pay off this debt you must have income or savings in the form of dollars. If you can't carry your debt, you're facing bankruptcy. This is the reason I call debt a short against the dollar. As this bear market moves on, as an increasing number of people and corporations run into trouble, the dollar is going to be a wanted item. Maybe it won't be wanted outside the US (the dollar actually could weaken internationally) but it's going to be wanted in the US. In fact, as the bear's grip tightens in the weeks and months ahead, we could even see a panic for dollars.
I've said all along that this bear market will be international in scope. The US has been the world's engine of growth. Sure the growth has been phoney in that it's been generated by Fed-manipulated 45-year lows in interest rates plus a veritable ocean of liquidity. But it's the US that the world has depended on as the place to sell its goods and services. If the US is sick, the rest of the world will also head for the hospital.
What, you don't believe what I'm saying? Let me show you a few choice charts. At the top we see a daily chart of the European 100, which is composed of the 100 biggest stocks in Europe. What we see is a big gap break below its 50-day moving average - and then another gap to a new low for the move. The EUR is now heading down to test its 200-day moving average. Not a pretty chart."
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