A Dollar Collapse and The End of the World as We Know It?

While I greatly admire Glenn Beck, and am indebted to him for what he’s been doing (as I can also say about many other Americans like Karl Denninger and Tyler Durden to name two that immediately come to mind), what he and many others are saying about the devaluation of the Dollar might come to pass, AND IT MIGHT NOT. In any event, even if I’m not very confident about a Dollar collapse, I still think it’s good to be abreast of the issues either way so “you can prepare”, and even better to be aware of BOTH sides of the coin in case the opposite happens, as I’m sure you’ll agree.

Okay we might see a Dollar crash that is inevitably coupled with a Stock and Bond collapse as commodities sky rocket, but, personally, I’m seeing lots of technical signs that tell me that the majority of markets are trading at extremes and that they’re close to coming back to the mean, or even further. What markets am I talking about? Gold, Silver, Oil to name the most watched commodities (but it’s all the commodities in general) along with Stocks and Bonds, and, of course, the Dollar. (Just a quick note of caution: if the Dollar were to collapse right here and right now, which it could – I’m not saying it won’t, only that I see signs that it’s more probable that the opposite happens – then those extremes would just get even more extreme before they come back to the mean, and then do so even more violently . . . that is unless all markets were permanently and forever closed at that extreme.)

In a nutshell, just about everything has been going up as the Dollar has been going down. When I say that markets are trading at extremes and that they’re close to coming back to the mean, or even further, I’m saying that I think it’s likely that everything sells-off EXCEPT for the Dollar! And, in fact, it would be a sell everything scenario precisely BECAUSE the Dollar would be going up!

When you get right down to it, that would simply be the flip side of what we’ve been seeing. We’ve been seeing a buy everything scenario BECAUSE of what a select few individuals and organizations have been doing to the Dollar. Given free rein, they would most likely continue with their madness and blow a few more bubbles, this time Zimbabwe like in scale. The trouble with that is that I don’t think they’re going to get that free rein and I think they’re going to have to hastily try to put their house in order. Simply put, and it might be as simple as that, they MIGHT NOT BE ABLE to continue trashing the Dollar.

The U.S. just witnessed some fairly significant – yes you could even call them “landslide” – elections that are more likely than not going to mark the beginning of an important sea shift in American politics for decades to come. The fraudulent are likely scared, and well should be. We may have already crossed the threshold, and the unwinding of the corrupt Ponzi may have already begun as the guilty begin TO TRY to jump ship and cover their tracks. It may be as simple as that. I don’t know, and that’s only speculation on my part, but my technical analysis of the markets is telling me that there is a very good potential for an almost immediate unwinding of current market extremes, and that would mean that EVERYTHING will FALL while the Dollar GOES UP! (I am referring to an intermediate term time frame from 3 to 6 months’ worth of trend that takes the Dollar up 25-30%.)

In my opinion, it’s worth watching the USD closely, after first having rebalanced your portfolio and then prepared yourself to hedge what you don’t have in cash should the Dollar do an “unexpected” about face.

You see, I think the Fed is caught between a rock and a hard spot. Take a look at what JPMorgan says about QE2 (By the way, this is not the first distancing we’ve seen recently from JPM):

How Ben Bernanke Sentenced The Poorest 20% Of The Population To A Cold, Hungry Winter
http://www.zerohedge.com/article/how-ben....

The political fallout from that might be difficult to manage to say the least (especially considering that that 20% is part of the Democrat base), and now that the Fed no longer has a rubber stamp in Congress, they might be thinking twice about what they’re doing. In fact, as some have suggested, QE2 might just be a Red Herring to begin with. I think Stocks and Bonds are going to get hammered either way intermediate term (a simplistic summary of the 2 options available are 1> economic contraction without QE2, and 2> stagflation with it), so what reason would there be to punish the general population even more? The only reason I can come up with would be to continue TO TRY to save their fat asses. But now they’ve got the threat of a renewal of the Rule of Law hanging over their heads and that might give them pause.

Personally, I think every red blooded American should be in favor of closing down the Mad Fed Printing Press. After all, isn’t America founded on the work ethic and personal responsibility? The Fed’s actions are punishing the responsible while rewarding the irresponsible, to put it mildly. The case would probably be better stated by saying that the Fed is actually destroying the honest while building up the fraudulent. Will the fraudulent put on the breaks now that they’ve got honest America breathing down the back of their collective necks? It’s possible, and my technical analysis says that it’s also probable.

Yes, be aware of the possibility of a Dollar collapse and all that would entail, but also BEWARE of the opposite happening. When everyone is on the same side of a trade, the trade tends to reverse. What everyone knows isn’t worth knowing as the old Wall Street adage goes.

So here are the 3 parts of Friday’s Glenn Beck Show for the Doomsday Scenario that I agree that everyone should be aware of. It’s certainly a must see if you consider yourself well informed.










Again, and I’ll leave it at this, I’m having real problems believing that Ben Bernanke & Co. will really choose to go down the same path taken by Zimbabwe, and my technical analysis of the markets gives me further reason to doubt it (at least in the next 3-6 months), but it’s probably not a bad idea to prepare for the worst and hope for the best in any event.

after watching this friday and thinking about it, I almost believe the fed's goal is to lose dollar as world reserve currency and form a new currency for the world. I also believe we are past the point of no return and just prepare for what is coming. WHo knows when but at least sub prime is contained.

Quote:

The U.S. just witnessed some fairly significant – yes you could even call them “landslide” – elections that are more likely than not going to mark the beginning of an important sea shift in American politics for decades to come. The fraudulent are likely scared, and well should be.

Why would they be scared? I don't recall anyone elected who would actually investigate anything. In fact Grayson (nutjob who's been after the fed and the banks for some time) and Feingold (one of the very few who voted against TARP) got ousted, so it appears to me that things got worse.

Admittedly, I've lost all hope that ANY future elected official does a damn thing about the Fed, so I don't actually follow the elections anymore. That said, I don't recall any threads on this board that expressed the "Thank god so-and-so got voted in! He'll be on the bankster's asses like white on rice!" sentiment.

As if my thesis posted above wasn't enough, how about foreigners putting a strangle hold on the Fed? A world wide "embargo" of Dollars? How long until the U.S. is officially labeled a rogue state? http://tickerforum.org/akcs-www?post=171....

And then there's Sarah Palin calling for the Fed chairman Ben Bernanke to "cease and desist" (which basically falls into and supports my main thesis). http://online.wsj.com/article/SB10001424....

Oh boy, I think the Benankster has found himself between a rock and a hard spot.

Last night he played Bernanke's "we will not monetize the debt" quote...I don't usually watch, but will this week.

Bill Buckler On The Incompatibility Of Money And The Modern Financial System; A Look At The Upcoming Great Unwind Now That All 'Talk' Has Failed
http://www.zerohedge.com/article/bill-bu....

Quote:

Mr Obama returns to Washington on November 14. He faces a “lame-duck” Congress and the almost certain prospect of political gridlock. Globally, the US policy of Treasury debt monetisation is being condemned almost everywhere. Now that the LAST hope of an international agreement to solve an insoluble problem has been lost, it is just a matter of time before talk is followed by action.

How long until Bernanke stands down?

What once looked promising is now looking less and less so with each passing day.

I wrote you back in early November, the 7th to be exact, telling you that I thought there was a very good chance that the U.S. Dollar had bottomed. It did so on an intermediate term basis generating a nice gain if you had bought and sold, but since we were talking a little longer term, the assumption is that you're still thinking I still have the same opinion and confidence in that November Dollar bottom.

The truth be said, things have changed drastically, and I would be stopping out at break even. In my opinion, financial markets are getting more unpredictable than ever, and while I still think there’s a good possibility that the USD does do a rocket shot, I now also think there's just as good a possibility that the November low will be tested and that it could even fail. While I still think there's a good chance we could see a "sell everything EXCEPT the USD" event, I think it's almost just as likely that we could also see selling of everything USD denominated, INCLUDING the Dollar (and most likely sympathy selling in overseas risk assets as well).

Those vastly differing possibilities do not create the basis for a continuing positive bias in the USD should those lows be taken out. For anyone who had initiated a USD long position, I would be walking away from that trade at breakeven if recent lows just below 77 were taken out - or at a minimal loss for more aggressive types using the November low as your stop loss. (If the position weren't to get stopped out, then you'd ride it with a big smile on your face, and if you do get stopped out, there's always the possibility to get back in when prospects once again look favorable.) Back in November it looked to me as though some predictability might have been returning to the financial markets in the form of a "more stable" Dollar and a meaningful correction in risk assets. Now I'm not so sure about anything "predictable" or "stable" returning to the financial markets anytime soon.

I also see the potential for a blow-off spike higher in equities. In short, extremes going to further extremes. With Fed induced overvaluations (and no end in sight for that "juicing") like we currently have, and the complete lack of meaningful change in the political arena, the kindling is there for a fast and furious run up. On the other hand, with commodity prices soaring as a direct result of the same, and its ensuing geopolitical risk, we could just as easily get a crash. Or we could even get both! Not a good time to be playing with fire.

I would also be exiting all speculative long positions in the equities markets, or at least rebalancing my portfolio to underweighting of risk assets (and I would be very generous with my definition of risk and would include US Treasuries and Munis in that mix).

To summarize: in my view UNCERTAINTY will be the key word going forward, and just about anything longer than a day trade (and almost that too) will be tantamount to throwing the dice in Vegas. Welcome to Bernanke's version of Financial Coney Island.

Remember, bulls make money, bears make money, but the pigs get slaughtered.

IMHO there are three sets of forces at work presently:

1. Ben's exported inflation is being met with some tightening abroad and I expect that to continue. This would put downward pressure on bucky (and also global liquidity)
2. I continue to believe that credit destruction is greater than we know. Monetary deflation is happening right here right now. This puts upward pressure on bucky given enough time
3. Bucky is the reserve, so a slowdown in the global economy would reduce the demand for bucky and its value

The question in my mind is in which order will we see these? Before today I would have guessed global tightening (down) followed by monetary deflation (up) but today's Fed speeches changed everything for me. IMHO they were telegraphing an end to QE. My wild ass guess is bucky goes up from here.