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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum -- Ignore unavailable to you. Want to Upgrade?

To: Haim R. Branisteanu who wrote (43236)	11/30/2008 5:12:46 AM
From: maceng2	Read Replies (2) \| Respond to of 219612

Here is a view that fits with the observed facts. marketwatch.com comment number 12 "JohnMD" The so-called "strong" dollar is not strong at all. In fact, it is the weakest currency within the ranks of industrialized nations. This is because the USA has the highest current account deficit of any nation in the world. There are literally trillions of dollars sitting overseas. Thankfully, for the USA, at the moment, the dollar is used, in most international transactions, which creates demand. For example, when Poland pays Russia for gas imports, it must buy dollars to do that. The problem is that this demand is going to evaporate over time. Russia is already talking about allowing countries that buy its products to pay in their own home currencies, rather than the dollar. At this moment, the Fed is engaged in playing a dangerous short-term game that will eventually discredit the dollar. It has vastly expanded some parts of its balance sheet, which affect the USA, internally, and constricted other parts, which affect the value of the dollar in overseas markets. They are, for example, bailing out banks, in order to make bank balance sheets look solvent by giving out "never-to-be-repaid" loans. They then take the money back in so called "reserves" (which they are now allowed to pay interest on). This prevents the money from ever being used for the purpose of making loans to business and consumers. This defrauds the American taxpayer by loaning out money, and then paying interest on the funds just loaned out. The banks, however, are still insolvent. The Fed is also buying stocks, through the vehicle of its primary dealer network, for the purpose of pumping the market indexes. This is done to defraud investors into thinking that the stock market is on the cusp of a major bull. That belief, in turn, helps many of the big banks to pick their pockets, because whereas the primary dealers of the Fed know exactly what is going on, and will take short positions when the money flow is slowed down, and long positions when it flow in. The losses are taken by mutual funds and individual investors. At the same time, the Fed is restricting certain aspects of M1, most particularly currency in circulation overseas. It also appears to have created dollar devouring derivative-type structures in which it agrees to pay interest on dollars that international banks sequester. This has resulted in a dollar shortage, even though the total number of dollars is enormous. This defrauds overseas supposed "allies", like Ukraine and others, whose people believed in the dollar and depended on it. It implodes the commodity dependent economies of such allies. All of the Fed's manipulations cause the dollar to rise in relation to other currencies. But, the short run is very different than the long run. The Fed's internal actions will bleed into the external, and the world will eventually be so overflowing with dollars that the dollar will collapse. Furthermore, allies will eventually discover what the USA has done, and will not forgive and forget. The dollar will lose all credibility as a medium of exchange. When it happens, and happens it will...the dollar collapse will be sudden and violent, and not very far off in the future. It will probably occur when the Fed's swap lines with foreign governments expire, some time in the 1st quarter, 2009.