So, the Fed is happy to allow U.S. manufacturers and exports to fall deeper in it than ever and give even more advantage to foreign manufacturers by allowing the dollar to climb? Is it just me or are modern economics a mystery to others as well. None of this makes any sense to me and defies all logic. I initially thought there was no way the U.S. dollar would climb rapidly but recent evidence certainly is indicating this. What am I missing here? :|
All very true and valid points however one upside on PM's for us Aussies is that they are priced in US dollars. I am of the opinion that the current strong aussie dollar is not going to last and buying PM's now will offset a decrease in the Aussie dollar later on. If PM prices stay consistent and stagnate at this level for quite some time i really won't be too fussed as i have locked in buying at dollar parity. Its not too much of a stretch to see the AUD headed to around 70-80cents USD in the next few years thus giving an instant 20-30% gain on PM investments.
The rest of the financial world has seen the Socialist Labor Party gut Australia's economy. As a result our dollar will fall as people realise that Australia's government has dragged Australia into the abyss along with the rest of the world.
I believe you are correct that in the short term ( a couple of years ) the aussie dollar will come under downwards pressure but when the u.s. dollar tanks, we could be looking at $1.50 u.s dollar exchange. Before the dollar was floated, the RBA set the rate and people forget that in the 1970's which was the last period of stagflation ( stagnant economy and rising inflation ) the RBA had the exchange rate set at nearly $1.46 with the U.S. dollar so we have been there before. Whent the u.s. dollar tanks, money will rush for stockmarkets and tangibles....the most important being oil. Oil drives the economy and thus a rapid increase will start off the rising inflation along with the rising cost of metals ( also tangibles ). This will create the feedback loop for high inflation in the world ( our higher dollar will protect us in some part but at the loss of what remains of our manufacturing ) so we will have higher unemployment, inflation, public strikes becoming common place as workers battle for proportional pay rises to claw back loss of purchasing power and government powerless to do anything meaningful.
I also think that the dollar will fall but for different reasons. Do you really think that any other political party would do any better for us ? They are there to make profit for themselves ONLY. Although very wasteful this govt is still doing way better then Dumbo's club. Sad thing is that they are all egoistical disaster and a mine-field. "along with the rest of the world" Percentage wise our economy is very dependent of G7's because our size is not significant enough to make a bigger impact. Last boom was thanks to China and not because any govt economist came up with a genius idea/discovery. So we'll always have to follow the World's conditions. Currently they are not great and regardless who you pick it will get worse. Outsourcing is a cancer of G7 economies. They are consumer driven but outsourcing make buying power of their consumers weaker in the name of corporate profit. Even some of our Army equipment was outsourced to cheap overseas places. Printing money can not solve that problem. BTW Swiss voted that govt and banks are not allowed to sell even 1 gram of their gold to other countries. Now, that is a smart move.
I think Numismatist hit the spot with sentiment that you should buy while times are good. Silver could drop to $17 but the AUD could end up at $0.50US with dealers charging twice the premiums they are charging now due to physical demand elsewhere in the world.
What people have to get in their mind is that countries i.e. Murica and Japan et al want a falling dollar. At this point the Japanese are laughing and the US has a problem it has to solve. What will happen the the already "fake" US recovery if the USD continues to appreciate... gonesky. The holy grail of debasement is to get a falling dollar without printing. The US tries to achieve this by crying wolf and postulating. The ECB achieves this by having fringe countries on the verge but never going over. Japan has given up on this and is just plain printing and is currently the winner of the race to da base Mark my words there will be a solution to all this USD appreciation nonsense, hopefully printing but they might get creative (push California to the brink??)
http://dailyreckoning.com/the-worldwide-crack-up-boom/ This is no more or no less than a world wide crack up boom as was described by von Mises in the 1920's. Bill Bonner posted this in 2007 before the crash of the sub-prime now he has posted it again this month as we will soon see the crash of the world stock market and I believe the US$. I am completely relaxed behind my barricade of real and tangible PM. Just need a good pair of spotting binoculars to watch the now-common soon to be rare possibly extinct ? spotted stock broker finch leap from the closest window ledge .
What's causing the recent strength in the USD? Is it simply that the Fed is considering an end to QE?
No it's a crack up boom. Freshly printed currency is pouring into the stock markets ESP the US from around the world. Some central banks are directly buying US stocks. This creates an illusion that the US economy is on the rise and all is well. The $ rise is a part of that illusion. This will end and it will end in tears. Did no one learn anything in 2008?
It will be several years before the u.s. dollar comes under pressure. The euro is yet to be discovered publicly that it needs to be completely reconsidered and the yen is under enormous pressure. Add to this the collapsing euro sovereign bonds and it can be seen that this transfer of capital to the remaining investments capable of absorbing the amount of money (trillions) is only stocks and the dollar which also will generate a return no matter how small. When it is the dollar falls the stock market will skyrocket but so to will inflation as all tangible investments, oil, gas coal gold iron copper, will rise as the money flows out of u.s. dollar and the largest bond market in the world, the u.s. bond market. This will mean inflation will increase dramatically so the rise in the markets have to be looked at in context. The same thing happened in the seventies, a stagnant economy and runaway inflation . The Aussie dollar was trading at about 1.45 u.s. dollar and it will return there eventually.
http://financialsurvivalnetwork.com/2013/05/john-rubino-is-the-crackup-boom-coming/ The crack up boom explained.
Missing the desperation to keep the USD as reserve currency of trade world wide and stop the chinese moving theirs into this position AND them being able to back value with gold. If this is allowed to happen, its game over for US bar nothing. People wont need USD, with the massive printing the devaluation would then come to the forfront with no demand. Atm, if Australia sells gas to China, China must buy USD to complete trasnsaction, then we convert it over to AUD. Australia has talked of settling trade in straight currency swaps though, as are a lot of BRICS countries already. Its about keeping power in a system of smoke and mirrors. There is more risk in other markets, so everyone runs to what they are told over and over is safe. When you print less in term of % to money supply, then you are stronger. If you cant see the logic in that, your not alone. We dont have economics anymore, supply / demand doesnt set prices but monitizing debt does. With that logic, what is to stop us all from printing our own $ at home? It now seems to be a legal way to get money....
In reply to Silver bullitt; I think the US would rather control and manipulate the investment money that flows into their financial system than the money from local manufacturing. Manufacturing requires infrastructure to get the goods to market but that infrastructure is crumbling. Jobs are only required for keeping social unrest in check. RT; Didn't our government sign an agreement with China in the last money to allow direct conversion between AUD and RMB?
