Strategies & Market Trends : The Financial Collapse of 2001 Unwinding

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To: elmatador who wrote (490)9/15/2017 11:52:27 AM
From: Elroy Jetson   of 895
As the reserve currency the Dollar should trade lower during an economic/credit expansion and trade sharply higher during an economic/credit contraction. The Dollar decline currently indicates the US is facilitating a global economic expansion.

Any country can drop the value of their currency by keeping interest rates below the rate of inflation and making credit more easily available, usually at the expense of creating an asset bubble. By implementing the opposite policies any country can stabilize or increase the value of their currency like China has after promising this as a condition of IMF membership - although they had to also resort to currency controls on their citizens.

No real investor paid any attention to anything Trumpo the Clown said, did or does. Trumpo said he favored a very strong Dollar and some foolish people believed him and took positions to profit from this alleged policy. Within the first two weeks Trumpo made 3 am calls to General Mike Flynn and others asking if he should prefer a strong Dollar or a weak Dollar and Trumpo discovered he actually favors a weak Dollar to expand exports so people who bet Trumpo knew what he was talking about took a bath.

Are there some people dumping US Dollar assets in a symbolic protest against Trumpo's racism? I have no doubt some small number of investors are doing so, but small numbers like that don't determine whether the Dollar trades strong or weak.

George W. Bush didn't have to create the post-9/11 real estate bubble by gretly expanding credit at the end of an already long economic expansion. Wastrelism is always optional, not mandatory.

Republicans have another 18 months or so to create similar false prosperity through currency expansion. They're currently working on a tax program which will create massive deficits - just what the Doctor ordered.

Trumpo's chaos-creation may be so disrupting it prevents even that from happening, even though they have enough votes in Congress to debase the currency. If so, the US Dollar with trade back higher in it's range.
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