Rogers Says Dollar to Be `Devalued,' Buys Commodities (Update2)

[Rajiv]

Re: Rogers Says Dollar to Be `Devalued,' Buys Commodities (Update2)

If Finster's FDI continues rising at the same rate as it has for another six months, the prices would be at 1987 levels, and if for another year, at 1972 levels -- and that is when this current mess began!

[LargoWinch]

Re: Rogers Says Dollar to Be `Devalued,' Buys Commodities (Update2)

In this media, you would better be "all eyes."

I watch too many Utube clips for my taste...so yeah, I am all eyes Jim.

When the proverbial "hockey stick" comes, I will do my best to ring the bell and I hope guys - like yourself - with more experience and brain cells than me, will do so sooner.

[Jim Nickerson]

Re: Rogers Says Dollar to Be `Devalued,' Buys Commodities (Update2)

If Finster's FDI continues rising at the same rate as it has for another six months, the prices would be at 1987 levels, and if for another year, at 1972 levels -- and that is when this whole mess began!

Not knowing exactly what goes into the FDI, I will venture that it will not continue its parabolic move, though certainly the Baltic Dry Index is yet to break its parabolic movement. I would guess the FDI will zag down at some point for more than a week or three and then maybe continue upwards perhaps at a lesser rate of ascent.

What Finster needs to do is figure out how to put an RSI and MACD with the most appropriate weekly parameters in them so that perhaps we can begin to see divergence in the indicators while new FDI highs are occurring, or perhaps such divergences have already occurred. Easy for me to suggest what Finster should do.

If one looks at a stockcharts.com weekly $CRB chart since the first of July it has moved nearly reciprocally to the FDI, and using stockcharts.com default RSI and MACD, to me they are not suggesting the $CRB is about to reverse. I don't know that that has anything to do with what similar indicators on the FDI would show.



Edit: If one goes to stockcharts.com and does a 10-year chart on $CRB, then the move down since July appears as parabolic as the move up since July in the FDI. That image is much more dramatic than the 1 year chart above. http://stockcharts.com/h-sc/ui?s=$CR...d=p53467617257

[medved]

Re: Rogers Says Dollar to Be `Devalued,' Buys Commodities (Update2)

Can you please expand/clarify that?

Here is a scenario:

1. US concentrates on its own problems, and so does everybody else. There is no agreement about the solution.
2. BRIC economies are in deep dodo, hardliners take over in China and Russia.
3. Europe loses its will to survive, US is too busy and distracted by its own problems. Europe gets more and more under the Russian influence.
4. Conflicts in the Middle East and the rest of Asia intensify. Whatever big money outside the US can sell their assets and move them into the US, does so.
5. Dollar stays strong and gets stronger. Better to have a lot of inflated dollars in the US, than a lot of hard gold in Russia/China/Germany/Kuwait.

http://www.telegraph.co.uk/finance/c...o-unravel.html

[Guest]

Re: Rogers Says Dollar to Be `Devalued,' Buys Commodities (Update2)

I think the dollar is about to break out on the upside all over again. I've been with the gold enthusiasts since 2002-2003 but I think there is a lot in Medved's "alternate scenario" that is entirely plausible. In fact I think its going to work out this way, for the next 2 or even 3 years. And that spells a knock down drag out ugly ride for all the precious metals other than gold. Even gold would get a rough ride from this. Starry eyed gold bug enthusiasts will get a harsh lesson in the value of perennial optimism for their investments. Of course I am one of them, only I'm an increasing skeptic for this entire set of assets looking several years forward.

Here is a scenario:

1. US concentrates on its own problems, and so does everybody else. There is no agreement about the solution.
2. BRIC economies are in deep dodo, hardliners take over in China and Russia.
3. Europe loses its will to survive, US is too busy and distracted by its own problems. Europe gets more and more under the Russian influence.
4. Conflicts in the Middle East and the rest of Asia intensify. Whatever big money outside the US can sell their assets and move them into the US, does so.
5. Dollar stays strong and gets stronger. Better to have a lot of inflated dollars in the US, than a lot of hard gold in Russia/China/Germany/Kuwait.

http://www.telegraph.co.uk/finance/c...o-unravel.html

[we_are_toast]

Re: Rogers Says Dollar to Be `Devalued,' Buys Commodities (Update2)

Not knowing exactly what goes into the FDI, I will venture that it will not continue its parabolic move, though certainly the Baltic Dry Index is yet to break its parabolic movement. I would guess the FDI will zag down at some point for more than a week or three and then maybe continue upwards perhaps at a lesser rate of ascent.

I agree. The rate of decent of some of these things simply can't continue for much longer. Oil will be at 0 in a few weeks, some local housing markets will be near 0 in a few months, many consumer items are bound by other costs such as labor.

Soon we'll start getting news reports about prices of some things leveling out. So even though the deflation might continue for another 6 months or a year, the rate will be much slower. I think at the point where the rate changes, and that may be very soon, investors will start dumping their deflation investments and go neutral or even start thinking of the coming inflation. We could see some spikes in stocks and commodity markets. Maybe trades within a trade, but from the long side.

I'm out on a limb on a tree with many broken branches from my previous speculations.

[LargoWinch]

Re: Rogers Says Dollar to Be `Devalued,' Buys Commodities (Update2)

Whatever big money outside the US can sell their assets and move them into the US, does so.

Well that is a lot of "Ifs", but ok.

One thing though: If China and the Middle East are in trouble financially, maybe they will want to spend these US T-Bill to save themselves?

This will cause a flood of USD on the market, pushing its value down.

[Basil]

Re: Rogers Says Dollar to Be `Devalued,' Buys Commodities (Update2)

Here is a scenario:

1. US concentrates on its own problems, and so does everybody else. There is no agreement about the solution.
2. BRIC economies are in deep dodo, hardliners take over in China and Russia.
3. Europe loses its will to survive, US is too busy and distracted by its own problems. Europe gets more and more under the Russian influence.
4. Conflicts in the Middle East and the rest of Asia intensify. Whatever big money outside the US can sell their assets and move them into the US, does so.
5. Dollar stays strong and gets stronger. Better to have a lot of inflated dollars in the US, than a lot of hard gold in Russia/China/Germany/Kuwait.

http://www.telegraph.co.uk/finance/c...o-unravel.html

I am no expert, but it seems to me that this outlook ignores that fact that the US cannot address its own problems without borrowing massive amounts of money from somewhere or printing dollars, or both. So we will not be able to simply focus upon our own problems, but will need to be deeply concerned about what is happening in other parts of the world. Also, if hardliners take over China, what might they choose to do with their dollars? The progression you outline has far too many ifs for someone to bank on it. BB has basically said that he intends to print his way out of deflation: http://news.goldseek.com/LewRockwell/1228405927.php

I am not saying that the dollar may not go up a little more in the near term, but I do not think that we can bank on Ben doing what he has already said he will do more than we can on whole bunch of geolpolitical maybes. I would like to hear some more convincing arguments for the rise of the dollar than the scenario you outline.

[kspencer]

Re: Rogers Says Dollar to Be `Devalued,' Buys Commodities (Update2)

If I am right that it is because of the massive deleveraging occuring, then I think the deflation should last at least another six months, and perhaps a year -- because I think the credit card and auto loan market is going to implode -- primarily because of increased unemployment that appears to be coming around -- coupled with the increasing inability of the remaining consumers to take on more debt (for I truly believe that the suddenly jobless will come around to relying increasingly on their family -- which will result in belt tightening all the way around!)

I'm in partial agreement. I suspect - and suspect is all I can do - that right now part of the driver for deflation is the collapsing credit market. "Credit is money till it isn't," but there's a period while everyone shifts to what money remains.

Yeah, simplistic. But it does seem to be the driver - nobody's got enough "money" (cash, credit, or recognized trade) to pay what everyone is used to paying. Either the costs adjust to available money, or something replaces the missing portion.

I want to see how the incoming US administration intends to pay for these infrastructure, energy, and other projects. It is possible to use those to shove replacement dollars into the pool. It is possible that they'll be able to shovel enough into the pool to balance and even overcome the credit contraction. It is probable, if the two preceding "possibles" come true, that they'll shovel in too much, whereupon we see Poom. I don't see any of this faster than six months, but I think a year (next holiday season) is a reasonable expectation.

[raja]

Re: Rogers Says Dollar to Be `Devalued,' Buys Commodities (Update2)

He's told me stories of German survivors of the war trying to exchange their gold for food and firewood. Unsuccessfully.

When Ukraine's economy collapsed in 1991 with the breakup of the Soviet empire, only those with gold and land prospered.

For the German war survivors, I'm sure food and firewood were of prime importance immediately after the war. But I imagine that when things stabilized a bit, exchange progressed to the point where "money" was again needed, and gold was acceptable in trade.

[LargoWinch]

Re: Rogers Says Dollar to Be `Devalued,' Buys Commodities (Update2)

When Ukraine's economy collapsed in 1991 with the breakup of the Soviet empire, only those with gold and land prospered.

For the German war survivors, I'm sure food and firewood were of prime importance immediately after the war. But I imagine that when things stabilized a bit, exchange progressed to the point where "money" was again needed, and gold was acceptable in trade.

Another example: All modern fighter pilots carry gold coins and not fiat in the event of a crash in enemy territory...

[medved]

Re: Rogers Says Dollar to Be `Devalued,' Buys Commodities (Update2)

If China and the Middle East are in trouble financially, maybe they will want to spend these US T-Bill to save themselves?

This will cause a flood of USD on the market, pushing its value down.

"China in trouble financially" is an oxymoron. China is a communist state in transition to a nationalist empire. They don't care about finances. They care about developing their industry, technology, infrastructure and the military, while avoiding too much unrest. They can spend some dollars, but not too many. They want to increase their productive capacity, not their consumption. There is nothing they want to buy in the US. They will only buy what they have to buy for whatever reasons (including propping the dollar if necessary). The more they build up their industry, the less they need to buy. If unrest still grows bigger, they always have enough tanks to control it.

The Middle East is totally dependent on the US, and they do not have anything like Chinese industry. What would they spend their dollars on? To build more hotels, ports and oil wells? They have enough. Whenever US military grip on the Middle East weakens, they will get scared, buy tons of dollars and move them to the US to buy "accepted" assets (stocks, bonds, companies etc).

When Europe gets into the beginning stages of finlandization, they will do the same.

The same applies to the India/Pakistan conflict. I am sure some people in Mumbai already think about buying dollars and moving them to the US. Of course, inflation in the US confiscates their wealth, but inflation in India does the same, and the coming Indian nationalist government will do it even better.

The progression you outline has far too many ifs for someone to bank on it.

You don't have to bank on it, you have to hedge against it. I am, actually, doing a little devil's advocate play. I would not like things to develop the way I describe. But we have to be aware of this trend. It can continue much longer, than we expect, just like the housing bubble.

I am not saying that the dollar may not go up a little more in the near term, but I do not think that we can bank on Ben doing what he has already said he will do more than we can on whole bunch of geolpolitical maybes. I would like to hear some more convincing arguments for the rise of the dollar than the scenario you outline.

I don't see any other reasons for the strong dollar. Of course, they are geopolitical maybes, but they determine our economic reality.

Actually, the dirty little secret is, I tried to develop this scenario in an effort to cleanse my mind from the leftovers of Marxist politeconomy, that I was taught in my twenties. One of its dogmas states, that economy is primary, and polical/cultural reality is secondary. Sometimes I catch myself thinking along these commie lines. So, I am trying to get rid of this and find enough examples of culture/politics trumping economic reality.

The simple truth is, the dollar represents a stable and strong democracy, that can protect itself in an increasingly unstable world. The American continents united and dominated by the US and its currency are much better home for the fast money, than anywhere else.

Granted, US became much more socialist over the last decades, but it is still safer, than China, Russia, Pakistan or anywhere else. And you just wait for the next political crisis in Europe and what happens to the dollar then.

Hoping I am wrong.

Бывший марксист.

[c1ue]

Re: Rogers Says Dollar to Be `Devalued,' Buys Commodities (Update2)

Medved,

From what I see, the rest of the world is moving towards a collective stance in which the 3 decades of past unconditional economic support of the American hegemony is going to be replaced by something much more balanced.

The Atlantic interview with a China SWF manager is very interesting if representative - check out Doom & Gloom's post in the Select area.

In this scenario, those charging blindly towards a strong dollar are going to be sorely disappointed. Because if America accepts Bretton Woods II, it will not be at a strong dollar rate - the last thing the US needs is its gigantic debts locked into a strong dollar.

[powersown]

Re: Rogers Says Dollar to Be `Devalued,' Buys Commodities (Update2)

... US now will develop something that it has not had in modern times, but Russia never abandoned, namely the black market.

I am thinking that people in the US working off the books or otherwise operating under the radar would constitute a black market. This undeground economy has been going on all around me all my adult life and I just turned 60. I think it is natural for people to avoid being controlled and robbed as best they can regardless of where they live. The US has certainly seen no exception to this.

[c1ue]

Re: Rogers Says Dollar to Be `Devalued,' Buys Commodities (Update2)

There is already a significant black market in the US.

In my business, one of the sources of competition are the 'private' caregivers: ones who work independently.

At least 90% of them don't pay Social Security or income taxes; they get paid in cash straight from the customers.

They also (both private caregivers and their clients) don't follow minimum wage laws.

This results in 2X disparities between what I charge for my services and what they charge.

Of course, in those not rare instances where one side gets stiffed (injury for caregiver, employer decides not to pay, theft by caregiver, employer abuse, etc etc) then caveat emptor.