Courtesy of Zero Hedge:
“The possibility remains that the recent economic weakness may prove more persistent than expected and that deflationary risks might reemerge, implying a need for additional policy support. The Federal Reserve remains prepared to respond should economic developments indicate that an adjustment of monetary policy would be appropriate.” - Bernake
The Nitwit in charge of the Federal Reserve uttered that sentence. In my mind the only questions are how much and when. How much more capital will be dumped into the TBTF banks that will further inflate away our savings and pump up the commodities (food, fuel, etc) we use to survive? When will the floodgates open again?
Commodities are already creeping higher, and I expect gold to go parabolic with the Greek PM asking for more cash as Ireland and Greece have had their bonds reduced to junk status. Let’s recap the items from the last week or so that are putting pressure on the dollar.
(BTW – There is no “tables” button here in WordPress, what a ripoff! I’m too lazy to do it in raw code so you get a bullet list.)
Strengthening the Dollar
- Greek Catastrophe
- Euro Instability – The currency, not the continent
- Irish Debt Catastrophe
- Spain’s Debt Crisis
- False Government Statistics
- Moody’s, etc. refusing to downgrade the US credit rating.
Weakening the Dollar
- TBTF Bank bailout
- Persistently high unemployment
- Rumor of QE3
- Whenever Ben Bernake opens his mouth (“Gold is not money” indeed!)
- Whenever Obama opens his mouth (blah blah blah blame Republicans)
- Whenever Boehner opens his mouth (blah blah blah blame Democrats)
- Weak housing market – Too much inventory, and prices still too high to move it.
- Egan-Jones downgraded US from AAA to AA+
- War #1 – The War on Drugs
- War #2 – The War on Terror
- War #3 – “Nation-Building” in Iraq
- War #4 – “Nation-Building” in Afghanistan
- War #4 (part deux) – Covert Shadow War in Pakistan
- War #5 – Libyan Regime Change (Matter of “days not weeks” my ass.)
- Greek bailout – for the low, low price of 700 million so far…
- US Misery index at 28 year high
No effect, or it’s a wash
- Arab world Instability (Syria, Egypt, etc.) – the uncertainty increases the dollar’s strength but because they are near oil-producing countries, the effect is minimized.
- Portugal’s Debt Problem (I’m impressed with what they have done but they are not free and clear yet.)
- Al-Queda’s threats of another attack in North America
- The Tea Party – When are these folks going to “nut up or shut up?” This grassroots movement sputtered out as the republicans tried to grab the reins and the Democrats swamped them with claims of racism.
I must have missed a few things in the list, but I am confident I got the big items. Just from the volume alone it is obvious that the dollar is going to continue to weaken. Today, gold crossed the $1600/oz mark. Silver is in the $40′s. Oil’s numbers are skewed because of the additional supply from the Strategic Reserve. To sum up our position with a metaphor: We are on the roller-coaster at the top of the first hill. The clicks and clanks are coming slower and slower as we are about to crest and begin the plummet down to one hell of a wild ride.