Why is the dollar strengthening?

When individuals exit all asset classes selling in mass it creates huge demand for dollars, those dollars have to come from somewhere to be credited to those accounts. Also banks are still not lending which tights up money supply at the consumer level. Paralized US money market funds exaggerated $ shortage. The rest of the world is seen as being weaker than the US. In times of crisis you have a flight to quality the US still seen as best bet in global economy. Also the reduction of $ denominated liability by forgein banks will create $ demand. Banks looking to roll over $ liability were forced to buy $ from foreign exchange markets. Once all this money from the bailouts floods the system then we will start to see inflation as more money chases after fewer goods this may not happen until late 2009. A strong $ will take away from GDP as our goods become more expensive and less competitive. In real terms the stock market losses are not so bad if you are a european holding US denominated assets seeing the 20% increase in US$

When people invest their money in the stock market they choose a company that they trust to make them a profit. When people invest in Treasury bonds they are basically saying that they trust the U.S. government to use their money in any way the government sees fit. When people invest in real money they don't trust anyone except themselves to use the money in the best way they see fit. Of course we are restricted from using real money, since it has been replaced by fiat dollars, FRN back by the U.S. military and legal tender laws.
grant

Opec is cutting supply because demand is down. The government is able to sell Treasury bonds to the people and foreign nations because demand is up. If demand for Treasury bonds falls, then the Federal Reserve will step in, take hold of the Treasury bonds and print FRNs.
grant

A few of his employees pinch-hit for him this week, but still good stuff.

http://www.europac.net/media/PeterSchiff_10-22-2008.mp3

OPEC is going to cut production that may put some negative pressure on the dollar.

"It is the responsibility of the patriot to protect his country from its government."

— Thomas Paine

The inflation that we would normally see in the economy is happening instead in the U.S. Treasury bond market, not that Treasury bonds are going up in price but the government is taking advantage of the falling stock market and therefore issuing and selling more bonds. So they are effectively removing dollars from one market and redirecting them to where they wish. If people and countries were to dump Treasury bonds the government would be forced to sell Treasury bonds to the Federal Reserve for them to print more FRNs which would increase the number of FRNs on the market or come up with another solution (cut spending, never happen!) People and governments are investing in the U.S. government, regardless how bad the U.S. government becomes people continue to invest in it, so there is no incentive for the government to cut cost, layoff workers or sell assets, which is what many large and small business are doing today.
I would venture to say that even Hugo Chavez is invested in Treasury bonds. If people really wanted to see the size of the Federal government shrink they would be dumping Treasury bonds, but as we can see this is not happening. Countries complain about the U.S. government, but they are partners continuing to invest in the system.
grant

The strengthening of the dollar is happening at the worst time for our economy, it will further drive down certain sectors of our economy while allowing for the government to press more and more dollars into service because foreign lenders will be more inclined to buy U.S. Treasuries. In other words, it will make it much easier for the FED to inflate instead of monetizing the debt directly.

http://www.1776solution.blogspot.com

If you study the patterns, I believe you will find that the dollar strengthens and the price of fuel drops every year right before a presidential election.

SUPPORT OUR FOUNDERS' AMERICA
Support the Constitution of the United States

I attribute it to my natural talent for buy high, sell low, or put everything into one basket and crush the basket. We moved a considerable sum of money into euros at .67 and had to convert it yesterday at .77, ouch. Just like the time when we sold our ranch and moved to Colorado and auctioned off our champion Brahman cattle herd on the day the Mad Cow disease scare broke and the auction price dropped so low that they had top stop trading for the day. :) c'est la vie!

That is my guess...they are trying to make Americans feel proud again so when the upcoming false flag event comes up, the people will be more inclined to support any action government decides to take.

If you are invested in silver and gold, don't invest your FRN money in silver and gold mining companies. They produce more silver and gold making your real money, silver and gold less valuable.
grant

The inflation will take a while to manifest itself. Maybe a couple of years.

You can't throw that amount of money at the problem without a bad result.

RE: The Zimbabwe economy...Inflation at 11.2 million percent
Despit desperate government intervention and price controls.

Gold will rule.

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

RonPaulLincoln
this is the typical set up. Maybe I'm wrong but if "they" can get everyone out of the market and locked into bonds thinking it is going to be defaltionary and then release hyperinflation on the economy, won't "they" will have done "it" again.
Muuuaah haa haa haa haaaaaa (rub hand together and grin fiendishly when saying the preceeding sentence ;) )!

all the foreign markets are currently down heavily so foreigners are seeking temporary refuge but overseas will stabilize quicker than America so the foreigners will then run back into their own currency and markets.

While the gold bugs were right about the precariousness of the mortgage and derivatives markets, they never guessed that the crash in these markets that they predicted would result in:

1. Precious metals plummeting by 30 - 50%.

2. Major gold mining stocks halving or more.

3. Junior exploration gold stocks tanking by 60 - 95%.

4. A rising dollar in the face of huge increases in federal
spending on one $100 billion bailout after another.

What we regard as money is largely a matter of psychology. While gold has been money for a very long time, the central banks seem to have succeeded in their goal of demonetizing gold in the minds of the vast majority of the public. So in a panic 99% of the investing public flees to the dollar, not to gold. As a man with a large stake in both gold bullion and gold stocks I'm not happy to have reached this conclusion, but my brokerage statement has a way of beating the reality into my thick skull.

Maybe that will change when people see annual inflation in excess of 15%, but with houses, oil, wheat, and every other commodity going down it is likely to be quite some time before the bingeing at the Fed creates any visible inflation.

Bob Chapman reaches, and he loves Ron Paul. Read about him here
http://www.theinternationalforecaster.com/Bob_Chapman