I've speculated, actually prognosticated, that when and if the dollar ever started to rise again, it would start to put downward pressure on the price of assets that the FED has supporting for the benefit of the super rich at the expense of inflation and zero wage growth for those who depend on hourly wages. As the dollar strengthens, oil has been getting a double whammy. First by the strength of the dollar, and also by the Saudi's who are laughing at "Drill baby drill". Without a doubt, a weak dollar, helped add gasoline to the flames of previously higher oil prices, which IMO, was just another fucking subsidy for the rich. While everybody right of center hates Obama, there is no denying that those with money and investments have done staggering well while Obama was POTUS. I'm sure these individuals consider themselves "smartest guys in the room" for doing so well, but I would counter it's not rocket science to shoot at fish in a barrel.
I'm not quite sure what to make of these charts yet. On the one hand, with the dollar looking pretty primed to me to break out, this would seem to indicate that while wage earners still will not get shit for a raise, the value of their wages are going to go father than previous. On the other hand, this is going to absolutely kill what meager exports we have. While our business leaders bemoan the demands of American workers who demand so much, I believe that these same people have become dependent on cheap money, open borders and billions of dollars in direct and indirect subsidies from the FED. Do they even know how to compete any more? If a stronger dollar theoretically increases the wealth of those with some money but no assets and weakens the wealth of those with assets but less cash, I wonder what happens next. The FED, I think, it basically out of all gimmicks to keep devaluing the dollar. I don't think this coming setup is really good for anyone, but I wonder who it hurts more.
One thing to always remember you cannot predict the market and that includes the value of the dollar.
ReplyDeleteOne thing seem apparent, people are fleeing stocks and living in cash.
The only thing required to devalue the dollar is more dollars and the Fed reserve can certainly provide the stimulus for more dollars flooding the market.
Of course the Fed is but 1 factor, the other factor is spending and borrowing. The more you spend and borrow, them lower the value of the dollar.
Morgan Stanley predicts the dollar will continue to rise in 2016, resulting in crude oil at $20 or lower.
ReplyDeleteSupply and demand is everything regardless of the value of the dollar.
DeleteI'm sure Morgan Stanley predicted $30 oil a year ago.
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