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Why is the Dollar at a 20 month high?

 
ThePatriotMind

User ID: 519678
United States
10/22/2008 04:26 AM
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Re: Why is the Dollar at a 20 month high?
It's WRONG to say the FED has been printing up all this money. The FED has been STERILIZING these bailouts by removing roughly as much liquidity as they have injected.
 Quoting: cheerios 481067


we will just have to agree to disagree on this premise
Signed

The Patriot Mind

* please read "The Creature from Jykell Island" short easy read on how federal reserve was founded... Then follow that up with the movie "America: Freedom to Fascism "
Anonymous Coward
User ID: 513931
Netherlands
10/22/2008 04:41 AM
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Re: Why is the Dollar at a 20 month high?
The U.S dollar index (major currencies index) went from 77 in October 2007, to 69 in April/March of 08, now it's back around the 85 mark and climbing.

Due to the obvious hyper inflationthat has occurred by the Fed. printing trillions of dollars in the past few months...how is this plausible?

Yes, there is a weaker supply side...but as we can see from the falling price of oil, there is also a weakening demand side...and people are still spending even more money now just to stay afloat.

It's now obvious that recent commodity price plummet is NOT a fundamental change in the supply/demand relationship.

When you go shopping this weekend and enjoy the lowest prices you haven't seen in a long while, you'd better ask the manager when will the next delivery truck arrive, or will it arrive at all! It's Economics 101 - all businesses are for profit. No one can operate at a loss--that's just not sustainable.

Hoarding fiat currency while new money is created out of thin air preserves liquidity but erodes value. Hoarding physical assets preserves value but reduces your liquidity...



So my question...I believe that the gradual increase of the U.S dollar is caused by everyone hoarding cash...

But with all the cash being printed...WHY IS IT STILL RISING?

Answers?? Links or personal opinion, don't care...jut need a new set of eyes.
 Quoting: LushLife



A lot of payments need to be done in dollars hence the demand for dollars is high at the moment. Long term the dollar will weaken again most likely.

Also the Fed hasn't printed trillions the last few months, what they have mainly done is providing loans to banks because banks are afraid to lend each other (which under the fractional reserve system is already money created out of this air by the banks (well not entirely but close enough)).
Anonymous Coward
User ID: 265661
United States
10/22/2008 05:02 AM
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Re: Why is the Dollar at a 20 month high?
good read here about swap lines

[link to www.marketoracle.co.uk]
Dervish

User ID: 527297
United Arab Emirates
10/22/2008 06:17 AM

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Re: Why is the Dollar at a 20 month high?
I have heard alot of theories about this.
1)Dollar positions unwinding so investors have to get dollars-creating demand

2)Foreign investors buying dollars to buy into the DOW at what they see as low rates

3)The fact that the US dollar has the strongest backing in the world.Namely the US military.
I know enough to know that I know nothing
Anonymous Coward
User ID: 531992
United States
10/22/2008 10:45 AM
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Re: Why is the Dollar at a 20 month high?
Its basically a crazy global demand for US treasuries...

When people get scared about their investments they flee to perceived safety...or the correct way to put it... they move their capital from stocks and other higher-risk investments to long-term US Treasury bonds...

....They are considered nearly risk-free. The assumption is that such an investment can only go meaningfully awry if the government itself collapses. (US couldnt fail could it HAH )

IN A NUTSHELL ... Traders around world are cashing in their investments for US dollars and using them to buy US Treasury Bonds as a safe-haven asset... meaning a lot of people around the world ( not so much GOVERNMENTS ) are scared and trying to preserve their capital in what they THINK is the safest investment in the world ... the USA


*** I tried to make that as simple as possible but that is the reason and I do not forsee it as anything LONGTERM
 Quoting: ThePatriotMind


This is right on the money no pun intended.After watching the euro markets last night 10/21 all they talked about was snatching up american dollars hf
Anonymous Coward
User ID: 481067
United States
10/22/2008 11:00 AM
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Re: Why is the Dollar at a 20 month high?
OP, the reason is the LOWER OIL PRICE period. Saw a brilliant discussion on this on Aljazeera of all places just yesterday. THE MOMENT THAT THE OIL PRICE RISE AGAIN the dollar will be toast.


This absolutely correct.

Why should a lower oil price increase the Dollar exchange rate , i.e. the demand for the Dollar?
 Quoting: Anonymous Coward 532098


You have it backwards. When the dollar becomes toast, oil will rise--rapidly at that.

Right now, oil is going down because of less demand/deflation. It will rise because of monetary inflation.

There is a big difference between simple PRICE inflation (i.e. demand for tickle me elmos causes price to go up) vs. monetary inflation (zimbabwe).
FF
User ID: 456207
Austria
10/22/2008 11:06 AM
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Re: Why is the Dollar at a 20 month high?
Just the usual manipulations nothing else.
Anonymous Coward
User ID: 481067
United States
10/22/2008 11:08 AM
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Re: Why is the Dollar at a 20 month high?
It's WRONG to say the FED has been printing up all this money. The FED has been STERILIZING these bailouts by removing roughly as much liquidity as they have injected.

we will just have to agree to disagree on this premise
 Quoting: ThePatriotMind


Why disagree? It's there in black and white from the Fed New York website. Look at the monetary base column. Notice the nominal growth this year despite all the bailouts.

[link to www.federalreserve.gov]

Although I absolutely don't discount that radical inflation will eventually come. Remember that although the common person has no idea what sterilization/monetization is, other central banks have razor sharp people watching the fed like you'd watch your 500share stock position. and if China/Russia/Japan/UK/Opec see us starting to debauch our currency recklessly, they'll probably be more inclined to hit their sell buttons.

This is more of an issue now, now that we're the largest debtor nation, twin deficits and the fact that foreigners own roughly 25% of the total 10T debt. It wasn't such a big deal let's say post ww2 when we were the largest creditor nation and we enjoyed bretton dollar hegemony.
Anonymous Coward
User ID: 481067
United States
10/22/2008 11:17 AM
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Re: Why is the Dollar at a 20 month high?
OP, the reason is the LOWER OIL PRICE period. Saw a brilliant discussion on this on Aljazeera of all places just yesterday. THE MOMENT THAT THE OIL PRICE RISE AGAIN the dollar will be toast.

It's not! Look at the SWAP lines, there is a Dollar shortage.
 Quoting: Anonymous Coward 532098



those dollar swaps were to make it easy for the g7/8? countries to gain easy access to dollars to pay off their dollar liabilities. if they didn't have these swap lines, they'd have to sell their dollar assets further depressing prices.
loosecannon

User ID: 532467
United States
10/22/2008 11:18 AM
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Re: Why is the Dollar at a 20 month high?
The U.S dollar index (major currencies index) went from 77 in October 2007, to 69 in April/March of 08, now it's back around the 85 mark and climbing.

Due to the obvious hyper inflationthat has occurred by the Fed. printing trillions of dollars in the past few months...how is this plausible?

 Quoting: LushLife


the answer is deflation pure and simple.

And as some other posters have pointed out don't be so sure that the money supply is growing. I don't think we can know but I would bet otherwise.
Me114

User ID: 323570
United States
10/22/2008 11:39 AM
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Re: Why is the Dollar at a 20 month high?
shameless bump for opinions.
 Quoting: LushLife



the movement in the markets from redemptions similates a HIGH DEMAND for US dollars, because the positions being sold to raise cash are denominated in US Dollars
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Anonymous Coward
User ID: 530622
United States
10/22/2008 11:45 AM
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Re: Why is the Dollar at a 20 month high?
dont look at the dollar index look at the BONDS!

thats were the dollar is collapsing...

its rising in the index because there are no dollars in the tresury, and they are inflating to get more.

but the interest on the dollar bonds and t-bills is on the floor.

hope you understand
Anonymous Coward
User ID: 532426
United States
10/22/2008 11:52 AM
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Re: Why is the Dollar at a 20 month high?
The Us dollar is temporarily going higher because dollars are being destroyed faster than they are being created.

This will only be a temporary effect until the flood of liquidity hits the markets after the banks regain solvency.
floydian slip
User ID: 335173
United States
10/24/2008 03:48 AM
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Re: Why is the Dollar at a 20 month high?
I heard it just got a shipment of powder...maybe that's why?
 Quoting: SHR


chuckle

Am I the only one that got it?
floydian slip
User ID: 335173
United States
10/24/2008 03:49 AM
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Re: Why is the Dollar at a 20 month high?
Thread: Why the Dollar is Up and What Really is Going On

Aside from the social engineering that is going on to destroy this Republic and distract people with a contrived soap-opera of an election (which may have a surprise ending), the markets are crashing and people are confused about what is really going on. Some people, and certainly those who are running the show, know fully well what to expect, but the average investor is kept confused by the pseudo-intellectuals and bought-and-paid for experts.

As the Treasury is being looted by a cadre that has taken over this government -- and totally debases the U.S. dollar by massively increasing the monetary base -- people sit back in utter amazement and confusion as they watch the U.S. dollar climb on foreign exchange markets. It doesn’t seem to make any sense, and people who are rationally trying to protect themselves against this debasement of the currency by buying tangible assets, are in a losing situation. But it does make sense. And to understand the mechanism (and timing) of the dollar’s climb is the only way to avoid harmful, premature investments.

It is well-known that enormous amounts of US bonds and other paper securities are held by foreign governments, including China, Japan, and other governments. Those governments know that the US currency is being irreparably debased, and they know of course also that everything denominated in US dollars, is simultaneously being debased. This includes those US bonds and other paper securities. They are no idiots, and want to sell the paper. If they dump it on the market, the price of that paper would go down because they simply have too much of it to move. So they try to sell it in smaller lots, and sell just enough onto the markets so as to not affect the price too adversely.

The key to understanding why the dollar is going up has to do with what in fact those countries get in return when they sell that paper. They are getting something, and that something is Dollars. The more bonds they sell, the more dollars they get in exchange for those bonds, and this causes a temporary shortage of dollars which temporarily increases the value of the dollar. The more bonds they sell, the greater the shortage of dollars to pay them, and the higher the dollar.

What we are witnessing with the current increasing value of the dollar is a temporary phenomenon, and the magnitude of that increase in the dollar correlates with the magnitude of just how much US paper foreign governments are trying to dump. The only thing that is keeping the bond markets from collapsing with this ongoing, massive selling of bonds by foreign countries, is the fact that, within the US, there is concern about the stock market and a misnomered flight-to-safety where people buy bonds instead of equities. Because there is no other vehicle large enough to accommodate the sheer amount of fiat currency in the US, corporations and others are literally forced to buy up bonds and Treasury securities, even though the debasement of the currency will make these dollar-denominated assets plummet as the effects of the debasement unfold.

The rise of the dollar is entirely temporary, and is mechanistic and time-limited in nature. When those foreign countries take possession of the dollars they are paid in exchange for the bonds and securities they are selling, they will then want to dump those depreciated dollars. So essentially, the value of the dollar will first spike, then hover in a seeming steady state of equilibrium, but then collapse. When the dollar then inexorably starts down, the game is over, and all the consequences that have rationally been predicted for social collapse and re-structuring of this Republic will quickly come to pass, as does day to night.

As the municipal, county, and state governments sequentially go bankrupt from their ownership of 70% of stocks in the stock market, and as they flee from the stock market to buy depreciating US bonds, everybody goes broke in a catch 22 situation. The key to the timing of these events is to watch the bonds and the inter-related, but temporary, mechanistic spike in the dollar, for when those foreign countries have received those depreciated dollars, they will, for their own survival, dump those also, and everything inevitably unwinds.

These things are known to those who are looting the treasury before the inevitable collapse. Bush himself has bought a 100,000 acres of land in Paraguay, and has his exit strategy planned out. Instead of declaring a force majuere, all-contracts-void in the mammoth derivatives scam, those people who are looting the treasury of this country plan on making vast fortunes on the collapse of the stock and other markets. Why, for example, will the stock market go down? The answer is “Because That’s Where the Money Is.”

The only real question is: Where is the Provost Marshall General and Where are the Naval Flag Officers who have the full legal authority to stop the expropriation of trillions of dollars by arresting corrupt government officials, and have the power to prevent the bankers and their cronies from destroying this Republic? Yes, where is the Provost Marshall General, and where are those duly appointed, patriotic Officers who still believe in defending this country against enemies foreign and domestic?

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