Prechter: Dollar Has Hit a Major Bottom - Video
Only time will tell, but don't say you've never heard the deflation argument. Robert Prechter is predicting a 1-2 year bull market in the dollar to accompany crashing debt and equity markets.
Forget all the talk about the dollar being in terminal decline. The recent rally in the greenback is for real, says Robert Prechter, president of Elliott Wave International. The man who correctly predicted the 1987 crash and last year's peak in oil prices now says we're "going to be up for a year or two in the dollar." ...
Article & video link at Yahoo!
The basic argument: As debtors default and credit tightens, credit dollars disappear whence to which they came - into thin air. As the number of dollars in circulation declines due to debt defaults and falling stock market values, the remaining dollars increase in value. It is an elegant, intellectually appealing argument.
For the full story, read Prechter's definitive 60 page deflation handbook - FREE.
inflation is a currency
inflation is a currency event... the US is monetizing its debt.. it is like a snowball rolling downhill.. deflation? I don't think so.. for you deflationistas..... a simple question.. the world is in the worse recession/depression since the 1930's.. there is far less demand for oil.. so why is the price going up?
http://urbansurvival.com/
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Running (of the) Shorts
Boy, do I love it when a prediction starts to come true. Remember, I've been talking about the possibility of a melt-up going into options expiration next week as the nears are in about perfect field position to do a record-book 'running of the shorts'? (Maybe you don't get Peoplenomics, but it was there in a recent ChartPack...) The Fed meeting yesterday was - also as predicted - a non-event. Except for this one little part of the FOMC statement:
"As previously announced, to provide support to mortgage lending and housing markets and to improve overall conditions in private credit markets, the Federal Reserve will purchase a total of up to $1.25 trillion of agency mortgage-backed securities and up to $200 billion of agency debt by the end of the year. In addition, the Federal Reserve is in the process of buying $300 billion of Treasury securities. "
A prudent man foresees the difficulties ahead and prepares for them; the simpleton goes blindly on and suffers the consequences. Proverbs 22:3
Matthew 10:34 Think not that I am come to
send peace on earth: I came not to send peace,
but a sword.
It is not just a currency issue.
It is also a credit issue.
How many people still buy things with cash? Most people can't afford it. These days, many need their credit cards just to buy groceries. And their cards are being canceled, and their limits cut.
A fall in outstanding credit = deflation.
As to your question, "Why is the price of oil going up?" It depends on the timeframe you're looking at. The question could just as easily be asked, why is oil going down? Yes oil is up from the low of 42 or so it hit in the winter, and is trading around $70. But last year it hit a high of $142. Today's levels are down 50% from its high.
That is great that the Fed is going to buy 1.25 trillion in debt. But the stock market crash of 2007 destroyed ten times that amount. Another crash could wipe out $1.25 trillion in one day. And then do it again the next day. And the next. And the next.
Does the Fed have the political will to monetize our entire national debt? I doubt it. Bernanke has said he wouldn't (not that his words can be trusted.)
I maintain that the market can (and will) destroy credit faster than the Fed & Congress can create it. The result will be deflation.
what prechter also fails to
what prechter also fails to realize is that China has been buying gold and will continue to buy using the 2 trillion in US dollar reserves they have... prechter has not thought this through...
A prudent man foresees the difficulties ahead and prepares for them; the simpleton goes blindly on and suffers the consequences. Proverbs 22:3
Matthew 10:34 Think not that I am come to
send peace on earth: I came not to send peace,
but a sword.
Did they mention
Did they mention that Conquer the Crash came out in 2002?
Does Prechter believe that
Does Prechter believe that gold equities are going to get hit with the general equity market? I read a paper several months ago stating that historically gold and silver hold better value during deflation against other falling assets compared to times of inflation when gold and silver don't typically gain as fast in value against other assets unless gold/silver are the main bubble drivers.
A little deflation never hurt anyone
If inflation is the enemy (which many believe it to be, including Dr. Paul), then why the long face about deflation? Personally I would LOVE to get more purchasing power from my crappy FRN's.
Sure, it would be chaos for the speculative stock, commodities and real estate markets, but so what? A .50 cent gallon of milk would make up for it.
I'm betting deflation won't occur (as Prechter envisions) purely because it would be good for Main St. and bad for Wall St. The powers-that-be would never allow that.
Like I said, time will
Like I said, time will tell.
I'm not religiously wedded to any outcome. I know that the future is inherently unknowable, and to think otherwise is foolhardy.
Marc Faber, who is a wise man, says we may have both - first deflation followed by a massive inflation. I think this is the most likely scenario.
http://articles.moneycentral.msn.com/Investing/ContrarianChr...
Meanwhile, Mish has this article out today, which begins:
http://globaleconomicanalysis.blogspot.com/2009/08/deflation...
Those who say the Fed and the government will print forever are saying that our efforts to stop them, including HR 1207, will be utterly useless. However, if we do manage to stop the presses, there will be deflation.
If you recall, we did stop the bailout in the House on the first vote. Most of the Republicans (and many of the Democrats) who voted for it are now feeling the sting.
The bailout is failing. Americans are angry. What will happen when they come back for more money? While it is theoretically possible for the government to "print," the political realities are more complex, and getting more so each day.
2 plus 2 invariably equals 4...
I wouldn't say it say that its so much about "predicting the future" as knowing how markets and monetary policy work. How was Peter Schiff able to predict the housing bubble collapse and the current recession? Its not because he's psychic, he just understands the fundamentals better than most. Inflation is inevitable, because the money supply has ALREADY been inflated. It takes at least a year for new currency to make its way through the economy, and therefore it takes at least a year to see its effects. The point is, it has already happened. We are just waiting for the next phase of the unstoppable avalanche that has been set in motion. Predicting the future has nothing to do with having common sense and an in-depth understanding of how a system works.
Prechter also predicted the
Prechter also predicted the housing bubble collapse, and he goes beyond predicting a recession. Prechter's predicting DEPRESSION - worse than the first one.
Schiff didn't get everything right, especially his "decoupling" call. Decoupling will most certainly happen - it just didn't happen as fast as Schiff thought it would.
Where Schiff and Prechter disagree is on inflation / deflation. Schiff says deflation is impossible, in his book Crash Proof. Prechter predicts deflation on the basis that we've already had the huge inflation.
At this point, the bubble is burst. You can't refill a popped balloon. Just ask Japan. Credit will now / is being / destroyed faster than the governments and the central bankers can create it.
Anyway, nothing to get worked up about.
Time will tell.
inflation is a currency
inflation is a currency event.. not an economic event.. the economic event happens because of the currency event..
A prudent man foresees the difficulties ahead and prepares for them; the simpleton goes blindly on and suffers the consequences. Proverbs 22:3
Matthew 10:34 Think not that I am come to
send peace on earth: I came not to send peace,
but a sword.
Not just currency, but credit, too.
Don't forget that.
Please see the charts in this article by Mish that show the collapse in lending and credit:
http://globaleconomicanalysis.blogspot.com/2009/08/us-consum...
Yes, the Fed can create credit. I do not argue that. But given that consumers make up 70% of our economy, how will the Fed distribute that newly created credit to us? How will it get that credit into the hands of the millions of unemployed, and the hundreds of thousands homeless people in tent cities?
- - - - - -
Read the argument for D-E-F-L-A-T-I-O-N
No one knows what will happen, there are too many variables at t
No one knows what will happen, there are too many variables at time.
Thomas Jefferson once said, "The natural progress of things is for liberty to yield and government to gain ground."
Well, I guess he called that one.
A Republic, If You Can Keep It
Boy, do I disagree with this article........................
First off, credit defaults do not "disappear into thin air". Someone, somewhere, is always left holding the bag on the debt (usually the taxpayer). If defaulted credit just disappeared after the debtor bolted on his loan agreement, then all those dead mortgages that Fannie and Freddie have would not be a problem. The housing market crisis would be non-existent, and the bailouts would have been even MORE unnecessary than they already were. I have heard this argument before and it is complete propaganda. Just because someone defaults on their credit does not mean those "credit dollars" disappear. The company who made the loan is left responsible on their balance sheet for those dollars, and then through the bailouts, WE are made responsible for those dollars. Why do you think the Fed has already created over $24 Trillion in less than a year? To cover the bad debts of corporate banks!
Also, BRIC countries have openly stated their intention to move away from the dollar and into the IMF's new global currency; SDR's (Special Drawing Rights), which it recently began printing WITHOUT A CAP:
http://www.neithercorp.us/nforum/economics/global_currency_i...
http://www.neithercorp.us/nforum/economics/china_pushes_for_...
Once this happens (and it will), the dollar will be crushed. Numerous countries will follow BRIC out of dollars towards SDR's, especially when China switches.
Right now the (very small) rises in the dollar are often due to the fact that other countries are in the same predicament as us. They pull money out of yen or euros and buy dollars because they are still under the delusion that dollars are safest. It is not because dollars are "disappearing" from the economic cycle. The fact that the Fed has been buying our own Long Term treasuries obscures and manipulates the true value of our treasury bonds as well.
Finally, for those of you who understand that the Federal Reserve is INTENTIONALLY destroying the economy, you also know that the ultimate goal is to centralize all economic authority under international trade law and the IMF. Americans will not submit to the authority of the IMF unless they are desperate, and they will not except SDR's unless the Dollar is unstable or worthless. Therefore, the Federal Reserve MUST remove the U.S. dollar from the picture before moving forward. The plan cannot work with a strong dollar. Period. And this can only be done through inflation.
What Prechter doesn't seem to understand is that you can have deflation in markets AND inflation in currency at the same time. This is exactly what happened in Argentina in the late 90's and early 2000's, only in the U.S., it will be on a much larger scale:
http://www.youtube.com/watch?v=rH6_i8zuffs
For further info on why inflation is very possible, read here:
http://neithercorp.us/npress/?cat=1&paged=2
you said it
right there:
"Just because someone defaults on their credit does not mean those "credit dollars" disappear"
Okay, maybe they don't all
Okay, maybe they don't all disappear. They get sold at 10cents on the dollar, more or less. But some of them disappear entirely.
Yes, the government makes good on some of them -- for their big clients. Clients like AIG, Goldman Sachs, Bank of America, etc. But there is no way that the government can make good on them all.
When the stock market collapses and Joe Sixpack American loses 90% of his retirement funds in his 401(k), will the Fed & Congress swoop in to rescue him and reimburse the credit dollars that disappeared from his account?
Me thinks not.
Jim Sinclair on the the Prechterites...
http://jsmineset.com/
Jim Sinclair’s Commentary:
Here comes the Prechterites.
Please do not send me emails enlightening me that Mr. Prechter is bullish on the US dollar, bearish on gold and espousing deflation.
First, this is nothing new and has occurred on every gold/dollar reaction since $248 and USDX 120.
Secondly, on every gold reaction millions of flyers are mailed out by this source espousing just this opinion.
Third, JSMineset is provided daily as a service and competes with no one.
Fourth, Mr. Prechter is a by subscription service.
Fifth, I do not care.
Sixth, I will use the delete button as your message is simply to sustain your own bearish opinion, or worse yet, your fear.
Give me control of a nation's money and I care not who makes the laws - Mayer Amschel Rothschild
Give me control of a nation's money and I care not who makes the laws - Mayer Amschel Rothschild
I notice no comments to this
I notice no comments to this post... gee wonder why?
A prudent man foresees the difficulties ahead and prepares for them; the simpleton goes blindly on and suffers the consequences. Proverbs 22:3
Matthew 10:34 Think not that I am come to
send peace on earth: I came not to send peace,
but a sword.
Jim Sinclair is correct...
Jim Sinclair is correct... prechter was calling for gold to back to 150.00 when it hit 400.00 .. he has been doing it all the way up.. those who have followed prechters advice have missed the gold rally which has only just begun.. these moves to 8000.00 gold will take years.. and oh yes the the dollar sure is rallying!.. lmao
A prudent man foresees the difficulties ahead and prepares for them; the simpleton goes blindly on and suffers the consequences. Proverbs 22:3
Matthew 10:34 Think not that I am come to
send peace on earth: I came not to send peace,
but a sword.
Oh boy when can I buy some $250/oz gold?
"We have to spend money to keep from going bankrupt"
Joseph Biden VP , USA
"Since 1789 the only government on Earth that has the power to crush the American people`s liberties across the board is the government of the United States"
Robert Higgs
You know my view on this ....
Massive inflation of the dollar can only occur if there is a decoupling of currencies. For example; if the Brick nations move towards a gold standard.
And I believe that is going to happen, but I don't think it will be the Brick nations. I think it will only be a bilateral decoupling.
My prediction is that China and Japan will become partners in a currency that is backed by gold.
Then there will be inflation. Massive inflation.
I predict this will happen in about 5 years.
Having said that ...
The dollar will continue to lose value against gold over the next 5 years. Betting on gold is a good hedge if you are a Bull in the equity markets.
As for me ...
I am bearish for the fourth quarter in the equity markets.
Beyond that time line, is anybody's guess. I will let you know in November.
WAHOR!!
http://www.dailypaul.com/node/48994
WAHOR!!
http://www.dailypaul.com/node/48994
yawwwwnnnnnnnn.... time to
yawwwwnnnnnnnn.... time to go back to sleep...
A prudent man foresees the difficulties ahead and prepares for them; the simpleton goes blindly on and suffers the consequences. Proverbs 22:3
Matthew 10:34 Think not that I am come to
send peace on earth: I came not to send peace,
but a sword.
Tomorrow should be an
Tomorrow should be an interesting day for the stock market, when the Fed meeting ends.
A bit of a warning shot across the bow ...
Is that how you took it?
I actually think the words were specifically chosen to send a message to congress about 1207.
I may simply be paranoid, but it sure seemed that way.
WAHOR!!
http://www.dailypaul.com/node/48994
WAHOR!!
http://www.dailypaul.com/node/48994
I think it will go as expected.
No surprises.
Up or down a bit.
I would be very surprised if unusual language is used.
The markets will not need it come October...
And the 3rd quarter retail earning reports are hinting that they need a bailout or there will be massive bankruptcies come January.
Freedom is our destiny, it will not be denied.
I just started rereading the road to surfdom this evening. A good book is enlightening no matter how many times you read it.
The road to freedom may mean the death of me, but I am more concerned about my children and their children.
God Bless.
O.K., I am going to go out on a limb and say first quarter 2010 will be bearish, but don't quote me on that. There is still a great deal of info and knowledge that needs to be had before confidence can be gained in such a decision.
WAHOR!!
http://www.dailypaul.com/node/48994
WAHOR!!
http://www.dailypaul.com/node/48994
inflation= deflation= inflation= deflation= inflation= crash
Timing is everything. Dr. Paul said he thinks it will be a few years before we see the real consequences of this intervention. The so-called independent Federal Reserve is enabling the Congress to enslave this country's future. Has the Federal Reserve EVER said NO to Congress and/or the president? HELL NO! The Federal Reserve is peddling worthless IOUs to every sucker that will buy them. It's like watching crack dealers and their clients.
Thomas Jefferson once said, "The natural progress of things is for liberty to yield and government to gain ground."
Well, I guess he called that one.
A Republic, If You Can Keep It
Has the Federal Reserve EVER
Ironically, HR 1207 could contribute to deflation by not allowing the Fed to continue to inflate...
Either way Michael the correction will happen at some point.
Thomas Jefferson once said, "The natural progress of things is for liberty to yield and government to gain ground."
Well, I guess he called that one.
A Republic, If You Can Keep It
On that we do agree. But on
On that we do agree.
But on my shelf I have many a book predicting the imminent demise of the US dollar -- published in the late 1970's.
In the long run, yes, the dollar is toast. The writing is certainly on the wall. Timing is everything.
Toilet paper soon to cost
Toilet paper soon to cost $1.00 a roll.
http://www.meetup.com/RP2012GrandJunctionCO
don't you mean,
$1.00 a sheet?
--------------------------------
Burn Bono, too.
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"the only thing that keeps the banking system from failing is general ignorance about how the banking system works."
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