Best measure of the value of the USD?
Submitted by john2k on Tue, 11/17/2009 - 13:50
in
Based on the definition of the USDX ( http://www.kitco.com/glossary/usd.html ) it really seems to me that the USDX calculation can potentially be manipulated far too easily.
It really appears just to be a fiat currency valued based on other fiat currencies and all of it is "subject to change."
Is there a better number to watch for a more accurate and possibly less manipulated understanding of the value / purchasing power of the dollar?
»
Useful things priced in dollars
Make-Move-Keep
http://metalprices.com/
A basket of commodities, here are metal prices, primary and scrap. Steel, aluminum, zinc and copper are essential for an industrial economy. The bigger the basket the harder it is to manipulate prices like the Fed and friends do with gold. Stock market has become the Las Vegas on the East coast, the game is rigged and values are problematic. Industrial materials have a known and proven utility.
Energy is required to transform and move these materials, they are on the bottom of the list on the right.
Now you got your steel pot and cooking fuel you need foodstuffs to prepare. I don't have a good link for that yet.
A place is needed to store stuff, cook a meal, take a nap. Real estate prices reflect the supply and demand here.
Fifty years ago when we made stuff in the US, production of Capital good for home and industry was and oft reported number. Today the GDP and its prediction of tax revenues is more important to the government powers.
For aggregate numbers I keep an eye on shadowstats.
http://www.shadowstats.com/alternate_data
Scroll down and look at Shadowstats GDP numbers. The economy has been shrinking since 2001. But why is GDP an important number for the government and why do they want to raise it instead of really improving the economy? Because the GDP is related to tax revenues, the bread and butter of the parasite class. The little uptick at the end represents the effect of the stimulus on expected tax revenues. That is why they say we need a bigger stimulus. That is why we are so screwed.
I have not developed the sophistication to look and futures contracts and mostly keep an eye on historical and current prices.
All for freedom? Freedom for all!
Free includes debt-free!
The price of
bread and milk.
I vote for the price
of a gallon of milk.
Please Donate Today!
https://www.youtube.com/watch?v=khDgz0rODZU&feature=g-upl
For historical purposes...
quarts are better than gallons.
Gallons are a more recent occurrence.
The reason I asked this
The reason I asked this question regarding the USDX is because it seems that the USDX generally remained between 75 and 76 while gold went from 1000 to 1140. It just seems that the USDX isn't quite as correlated to gold as I expected it to be. Gold +14% I figured would correlate to USDX decreasing significantly more than <1%.
...
There are the Shadow Stats
There is the Shadow Stats CPI deflator. According to it, the dollar is worth $0.0475 based on a 1964 dollar - the last year that dollars were convertible to both gold and silver.
My Opinion Only !
*
If there's supposed to be multi-trillions of dollars in existence and the value of many of these dollars are supposed to be based on real estate collateral that only gets its value from prospective buyers who make offers in dollars to buy this real estate, it is impossible to determine a correct "and lasting", value on the dollar.
If the Fed floods the world with more dollars, it only dilutes the value of the dollars already in existence. Eventually causing higher prices in everything denominated in dollars,,,,like Gold and commodities.
As Ron Paul and Peter Schiff say, if companies and banks are allowed to declare bankruptcy, the dollars carried on their books are retired, written off, destroyed, whatever term you want to use,,,this would eventually shrink the total amount of dollars, eventually making the dollar more valuable....but probably causing unemployment to rise.
If we the people want a solution, listen to Ron Paul who wants to abolish the IRS,,,Abolish legal tender laws,,,and abolish the Fed,,,this would put more money into local economies where jobs and employment start, in the first place, and make whatever money we decide to use valuable because as employment picks up more wealth, that can be used as money is produced, contributing to much more widespread prosperity.
Retire all debt and watch employment grow.
Ron Paul is my President !.
beesting
About bankruptcy destroying
About bankruptcy destroying dollars, I do not believe that is correct. Stocks are priced in dollars but are not dollars themselves. They are an asset like anything else. When you destroy any of your assets (or they become worthless for whatever reason, such as bankruptcy regarding company stock) that does not mean the money you spent on them is automatically removed from the money supply. Whoever you paid still has that money or spent it elsewhere.
...
It's not even possible to define what an FRN is
A dollar is 1/20 oz. of gold.
The USD (this link is a
The USD (this link is a great tool to educate people) as an index is sort of disconnected from our street level reality.
In spite of the USD index decline since November 2005 (4 years now) it hasn't had a stunning impact on our real buying power. Certainly not as stunning as the index's decline.
This is not rocket science at the street level where we live. Just look at food prices, energy and other close at hand commodities and services we use daily.
I believe the USD index is trying to form a new bottom right now and it may very well take off for a long period of time. It's due if you are a technical trader. You can see it happening.
Just like US equities, markets move up and down. They repeat patterns over and over.
There's a saying that Low prices are the cure for low prices and high prices are the cure for high prices. Supply and demand forces resolve price extremes. Even in highly manipulated markets there is always a reaction to the extremes.
So the key to succeeding in any market (even the grocery store) is to be able to read changes in buying and selling pressures.
When you learn to read these changes you can ride the market moves in the correct direction and profit.
The old adage, "Buy low and sell high", is still the only rule you need to remember.
"GINO" = Government In Name Only
USDX gives an interesting
USDX gives an interesting view into the cause of gold price increases or decreases. If it is going up in dollars and in the basket of currencies by the same amount...there is most likely a supply and demand issue. If however, the price is going up faster in dollars than the basket of currencies...then the dollar is devaluing faster that other fiat currencies and gold's price in dollars is due to greater inflation/dollar devaluation.
So USDX is still pretty useful. The USDX is only about a month old and was derived from people concern about a weak fiat dollar and inflation with the dollar.
======
Federal Reserve to the American People:
"Catapultam habeo. Nisi pecuniam omnem mihi dabis, ad caput tuum saxum immane mittam."
================
Who is John Galt? Vote ███ ███ 2012!