Panic may ensue along the way. And since the majority of the dollar index is the Euro (>60%), I give you the following ominous-looking chart :
Take out 1.425 and I can argue that we're going to head for 1.50. Apparently, Goldman Sachs is with me on this one - whether or not that is positive or negative I don't know. And 1.50 should put us squarely at all-time lows for the dollar index.
Then what? The dollar should be rallying? Is Bernanke going to announce the unwinding of the Federal Reserve balance sheet? But "core inflation" is still too low, right? And while they are doing their best to slaughter the yen today, a dollar collapse could possible mean failure for that strategy.
Either something breaks (preferably the euro), or we are going to have a dollar meltdown/panic before the summer. Be warned, this might get really ugly. Especially since
a ) The retailers are still long the dollar
b ) There has been little or no mention of the collapsing dollar in the media. People were actually shouting louder a year and a half ago, before the European worries started.
This is intriguing because Ron Paul has said his run for 2012 depends if there's a dollar crises...I wonder if he sees this too? The timing would be right because he couldn't make such a statement if he didn't think it was something that could happen extremely soon (i.e summer time).
ReplyDeleteInteresting.
It seems that our government has the ability to keep putting off the inevitable, although I am sure that it will only make the final fall worse. I saw the dangers of fiat money as a child after my grandfather taught me about keeping a savings account. The interest earned did not even come close to keeping up with the increase in cost of my favorite candy bar. It always got me to thinking - wouldn't it be better to just buy and save stuff?
ReplyDeleteSave Wealth, Not Money