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US Dollar Breaks 80!

USDX at 80.12

Make of it what you will.

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Here comes the third

Here comes the third “Oops” concerning the Fannie/Freddie deal.

Nothing has changed. The dollar rally is without legs fundamentally.

There is no wonder that the stabilizers will throw a match on the barn to keep markets from going into panic mode as they threatened.

Recall the statement that before it was all over the government would burn down the barn? The barn is the US dollar trying to avoid consequences.

There is an arithmetic limit to intervention in terms of the other currency reserves you hold as swaps are public each month on the statement and would be a sign of major intervention weakness.

Cost of US loans bail-out emerging
By Krishna Guha in Washington and Michael Mackenzie and Nicole Bullock in New York
Published: September 9 2008 15:57

The US on Tuesday began to face the financial consequences of the bail-out of Fannie Mae and Freddie Mac after Congress’s budget watchdog said the housing giants’ operations should sit on the government’s books and the cost of insuring against a US default crept higher.

With the stock market tumbling, the non-partisan Congressional Budget Office said the government takeover of Fannie and Freddie meant the companies should no longer be regarded as outside the public sector.

Peter Orszag, CBO director, said: “It is the CBO view that Fannie Mae and Freddie Mac should be directly incorporated into the federal budget.”
The Bush administration appeared to be caught by surprise. A spokeswoman for the Office of Management and Budget told the Financial Times: “We are working through this issue with Treasury and other stakeholders.”

The White House could take a different view on Fannie and Freddie and exclude them from its budgets. But this would be difficult because the CBO is regarded as the leading independent authority on US finances and its assessments guide spending decisions by Congress.

The two mortgage companies have between them $5,400bn in liabilities, equal to the entire publicly traded debt of the US, alongside mortgage-related assets of about equal value. These will now all be accounted for by the CBO, although public accounting rules mean that its tally of US government debt may not necessarily increase by $5,400bn.

this is hugely dollar negative and gold positive! its only a amtter of a short time till it really starts to unravel!

as for me and my home, we shall worship the LORD

Its simple.

Wait to they put McPain into position. Once he wins the rigged election. Then they will collapse everything. That way Adolf Bush doesn't need to declare Martial Law and he doesn't have to worry about being hung from a tree... as he should be. Nathanial Rothschild will have his lil puppet in place to continue with their plans. We've done such aa good job that we have had to make them change strategy. However, I am afraid that our stratagies may be lacking a bit. Our numbers may not be enough. But who knows? We may be able to stave off the wolves a bit longer. Gold, Silver and Palladium are falling purposefully to starve the Russian bear and to hopefully cause mines to collapse and/or sell them at a BARGAIN price. You must realize that the metal mines will not survive long with the prices so low. They hope that their demonstration on economic control and manipulation will cause Russia to fall in line. At least until they are done with Iran. But make no mistake. Russia is on the NWO chopping block.

As far as Iran is concerned. War with them will follow the staged event we call an election.

This illusion, that makes everyone fall back asleep will not last. McPain still needs some parts of some states that do not have electronic voting. Thus, the economy has to appear strong. They must propr it up a just a bit longer so they can pass more legislation that further imprisons us.

Does my burka make my butt look fatwa?

Does my burka make my butt look fatwa?

It's Not About the Strength of Our Numbers

It's the simple, inevitable fact that this fiat regime will collapse by virtue of its own unsustainability, just like every other fiat regime in the history of man.

"debt is really a 'dollar short' position."

"Only a virtuous people are capable of freedom. As nations become corrupt and vicious, they have more need of masters." Benjamin Franklin

Jay Taylor says:

I can’t help remembering Bob Hoye’s constant refrain that when the global economy runs into trouble, the senior currency gets stronger. Why so? Bob reasons that debt is really a “dollar short” position. When the debt has to be repaid, everyone scrambles to sell assets and buy dollars to answer the call of margin clerks.

government of the people, by the people, for the people

Id think that no one benefits

from a too weak dollar, in particular those foreign nations drowning in them or hurt in trade by a weak dollar.

From the Financial Times:

The US, Europe and Japan discussed the possibility of co-ordinated currency intervention to support the dollar during the Bear Stearns crisis in March, according to Japan's Nikkei online.

Id bet that the stronger dollar is not due to any increased faith in the currency and the american economy, but the calculated self interest of some big players.

"calculated self interest of some big players"

I agree.

But others are trying to avoid holding excess FRNs.

Brazil and Argentina this week dropped the dollar as an instrument to facilitate bilateral trade. Watch for others to sneak out the back door when the coast is clear.

Does this mean 80 cents?

For a nation that is afraid to let its people judge the truth and falsehood in an open market is a nation that is afraid of its people.
- John F. Kennedy

Mathew 5:9 Blessed are the peacemakers: for they shall be called the children of God.

LOL, no

No, actually 80 on the US dollar index is a very good thing. It's an index that compares the dollar against the Euro, Yen, Pound, Canadian Dollar, Franc, and Kroner.

The dollar is worth significantly more today than a few months ago.

It's not a good thing...

...if you're waiting around for the Fed to implode like every good American should be doing.

It would be tough going for a while but a return to sound money would be worth the pain.

But for the average Big Mac munching, soda swilling, Oprah watching man or woman on the couch, it's a good thing because the fantasy can go on just a little bit longer.

I'm not

I'm not waiting around for the world to collapse around me, are you?

It's defeatist thinking...it's like saying i'm going to die eventually, why even bother getting out of bed today?

Call me what you like, but i'm enjoying my life in the manner that it makes sense to me.

A monetary collapse won't cause a massive return to sound money. We would be under the control of government more than ever, because the amount of people willing to stand up to them will be very small when 95% of the country is starving. You will be more of a minority than ever, and thus easier to be silenced.

A monetary collapse will lead us to more socialism.

I Respectfully Disagree

And I won't call you names, either.

I am not "waiting around for the world to collapse around me," I am waiting for real life to begin.

When the lie that is the Federal Reserve becomes apparent to the American people, they will do what they have to do. Control of the masses is predicated on the ability of the government and the media to 1) continue a monopoly on public opinion and 2) maintain the illusion that "all is well."

When the system collapses, people will be left to their own devices. We will depend on our own wits and the help of our families and friends because that will be the only aid forthcoming.

People will only stand on the rooftops crying for help for so long. Then they will help themselves. And after that experience they will remember, for once, how we got into such a mess. Because the lesson will be unforgettable.

The spell will be broken and real life will begin again.


I AM the people--the mob--the crowd--the mass.

Do you know that all the great work of the world is
done through me?

I am the workingman, the inventor, the maker of the
world's food and clothes.

I am the audience that witnesses history. The Napoleons
come from me and the Lincolns. They die. And
then I send forth more Napoleons and Lincolns.

I am the seed ground. I am a prairie that will stand
for much plowing. Terrible storms pass over me.
I forget. The best of me is sucked out and wasted.
I forget. Everything but Death comes to me and
makes me work and give up what I have. And I

Sometimes I growl, shake myself and spatter a few red
drops for history to remember. Then--I forget.

When I, the People, learn to remember, when I, the
People, use the lessons of yesterday and no longer
forget who robbed me last year, who played me for
a fool--then there will be no speaker in all the world
say the name: "The People," with any fleck of a
sneer in his voice or any far-off smile of derision.

The mob--the crowd--the mass--will arrive then.



The US Dollar Index (USDX) is a measure of the dollar against a mix of foreign currencies (euro, yen, etc). The scale can exceed 100.

In 2000 the USDX stood at about 120 (strong dollar) it recently dropped to as low as 71 (weakest dollar ever). It has now strengthen to 80.

The stronger the dollar the cheaper gold and oil become.

Nobody really seems to know why the dollar is going up because the fundementals for a strong dollar don't really exist. Probably foreign central banks propping up the dollar to help their own economies (strong dollar makes Americans buy more imports) and also because foreigners hold so many dollars they don't want it to fall too low.



Write downs are strengthening the dollar

The dollar is going up because of the liquidity crisis. It seems counter-intuitive, but it's true.

A writedown is essentially when a bank electronically erases money, in a manner of speaking. We have had so many write downs, it has actually affected the supply of money.

In the last year, we have had so many writedowns, it has elimintated enough money to begin catching up with us. The money that is left is now rarer, and has more value.

This will be a temporary thing, for sure, because the printing press ran pretty hot this year, and the overnight rate is still very low, so eventually they'll print enough money that will overcome the temporary destruction of money.

I would expect the dollar to strengthen over the next few months, then resume falling in 2009 once the real estate market begins to stabilize.


I cant tell if youre serious or joking, but im laughing regardless. So what youre basically saying is that the mess that started this mess is the cure for this mess. You need help buddy.

I know, it sounds wrong

Please ask any economist if they find a bank write down to be inflationary or deflationary.

The massive amount of money "printed" through the fractional reserve system created inflation when it was created, correct?

If the money when it was created caused inflation (because it increased the money supply) then it absolutely causes deflation when that money no longer exists.

The banks are essentially having huge barbeque's of virtual dollars right now, and the fed is feeding them liquidity to maintain reserve ratios, but that money isn't going into the economy, it's being held to justify the massive amount of bank created money which doesn't really exist.

It's a screwed up game, fractional reserve, but this is how it works.

Cash works through supply and demand the same way as any other commodity. Cash is rarer than before the bank writedown, and the amount of goods the cash is chasing is the same. Thus, you have a dollar worth more, or monetary deflation.


That's a sound, reasonable analysis.

So are they feeding them the

So are they feeding them the exact same amount they are losing or just enough to stay non-bankrupt or what. At some point, do yo uthink the Fed will cut interest rates to stimulate lending again with this freshly provided liquidity to the banks?


No...you don't need to replace every bit of money written down, just need enough liquidity to stay non-bankrupt (to stay above the reserve ratio and not need federal regulators to close the bank).

I don't think they should cut interest rates...there's a point where the overnight lending drop does not lend itself to further drops in the real interest rates that we pay for loans. We are below that point. The fed could cut a point off the overnight lending, and the mortgage percentages would not feel it in the slightest.

I think their only move with the overnight rates is up, but they won't do that until they get indications that the credit markets are shoring up and the GDP gets healthier...until then, I would expect a 2% rate. It's not a matter at this point of what they will do next, it's a matter of when they'll raise that rate.

Lending is probably as healthy as it was 20 years ago, don't believe the hype that no one can get a loan...but they aren't giving jumbo loans to bad credit risks without ample income in declining markets. This is not a bad thing.



Sound Reasonable

I used to be in the 'deflation can't happen as long as Bernanke's got a helicopter' camp, but the destruction of wealth in the housing bust/liquidity crisis is really amazing.

Jefferson said that the creation of a central bank would rob the people first by inflation then by deflation. So far he's right, but I think it's going to be an ongoing cycle of inflation and deflation, until...?

KaPoom Theory

(from iTulip) inflation, then deflation, then hyper-inflation

we are seeing deflation now...i don't have the link but it's under favs on iTulip

Thanks Susan

I've never visited that site before, looks interesting. I'll have to take some time to pour through it.

Some European economies

such as Germany have gone into recession. That's part of it.

"Just like Alex Jones will do; he'll try to put words in my mouth... You try to put words in my mouth too, just like Alex Jones does." - Ron Paul http://www.youtube.com/watc

"Just like Alex Jones will do; he'll try to put words in my mouth... You try to put words in my mouth too, just like Alex Jones does." - http://video.google.com/videoplay?docid=2370864598223573012&...

Yes, but...

Yes, that's probably correct.

But I don't think that the Eurozone recession is necessarily making their currencies weaker against the dollar (the dollar is garbage, especially after the Fannie/Freddie bailout).

More likely the Europeans think that they can increase exports to the US and shore up their economies by buttressing the dollar through central bank purchases of FRNs.

Problem with that is that Americans can longer get the credit they need to buy foreign crap and regular folks ain't got no cash.

LOL that's funny!! You took the words right out of my mouth!!

Help Ron Paul's delegates get to St. Paul!
Historic moment at WA State Convention at minute 4 here!!

What are you fightin' for?
Caught in the middle?
Freedom is only for those with the guts to defend it!