Why the U.S. Wants the Dollar to Fall

Why the U.S. Wants the Dollar to Fall

www.moneyandmarkets.com

Why on Earth Would the U.S.
Want the Dollar to Fall?

Here's how I think the current argument goes:

The U.S. wants nothing more than to keep global growth humming ...

In order for global growth to remain on track, they know that China has to keep going gangbusters ...

And for China to keep thriving, they know that Mr. and Mrs. U.S. Consumer must continue shopping. That's because they're still the biggest buyers of China's exports.

Thus, everything still hinges on U.S. consumers!

The Fed knows that lowering interest rates is the best way to support domestic shoppers. Lower rates make it easier for people to keep borrowing and buying.

As happy side effects, those lower interest rates also:

Make money cheaper to borrow and readily available for investment speculation.

Push the value of the dollar lower, which makes things like U.S. stocks look cheaper to foreign investors (see my chart).

Allow large multinational U.S. companies to translate foreign sales back into more dollars.

The sum total of these three forces is that U.S. stocks are likely to go up. That's great since higher stocks also makes U.S. shoppers feel wealthier and more likely to spend, spend, spend.

(visit the link for the full news article)

We all know the dollar is going down, this is just one of many theories of why the feds or global elites are destroying the dollar.

www.moneyandmarkets.com
(visit the link for the full news article)

i joined that very forum (market oracle) because i wanted to criticize the article ...........or the reasons the author listed further down as to why certain things will have certain effects on the stock market....things that ignored the global credit crisis is spreading and that the growth in the last 5 years in the "west" has been from the same areas that are getting obliterated by the credit crisis, and in turn have fueled china to have such large export demand.

it is not the U.S who want's the dollar to go down, it is not because it balances the trade deficit (that is the spin)

it is not the u.s decision, the dollar is going down because the full faith of the united states (is what it is backed by) and the rest of the world see's that the world wide credit crisis stems from the cancer that is the US housing mortgage industry and it's derivitives which were sold (spread) globally. They (foreigners) are losing faith in the u.s economy, because they see the u.s consumer is addicted to debt, the same debt that is tightening and inelastic to intrest rate cuts. intrest rate cuts give these perspectives some wind at the dollars back (headed downhill) as well as the current lead in the race for all currency's to be devalued against gold, the next wind gust will come when the ECB and The US FED have to inflate much faster, such as when ASSET PRICES (stocks, houses) C R A S H

This will not be mentioned in the nightly news or in many economist websites till it is painfully obvious.

[edit on 26-11-2007 by cpdaman]

Japanese finance minister has already began to consider selling the YEN to balance out the decline in the US$.

I believe that some time in early January, on the Fed has lowered the FED FUNDS Rate (not what I would do), by another 50 bps, you will begin to see the US defend the dollar policy along with Japan selling their own YEN.

I want to know one thing.....Why has the Euro been boosted the way it has? Fundamentally it is no sounder than the US$. Within the next 6 months you are going to see the same kind of credit crisis' popping up all around the globe, Europe included. On top of that, I believe the Chinese market ain't all its cracked up to be. Banking system is a huge question market as it is unregulated. Once we hear the POP in the China markets, we will see how fast everyone runs back to the American markets, further running up the US$. Take it for what it is, this is just my opinion.

For full disclosure, I am still in the same portfolio of 15 stocks I entered in June. I am short all 15 and not just ready to get out of them, at least not yet. By January, I do intend on being NET long the US markets.

Again, just my opinion, but I expect the S&P to trade down to 1325 and the DOW to close below 12,000 before I enter any long positions. Believe it or not, the US banking system is a lot stronger than people think and this sell off is creating a very good buying opportunity......in the right stocks, not all of them. Don't try to pick bottoms, we are not there yet. NEVER TRY TO CATCH A FALLING KNIFE!!!!!


[edit on 26-11-2007 by traderonwallst]

Why would the US want global growth to continue?

i'm not disagreeing with the premise put forth in that article, it's just that the US seems to have a very state-orientated agenda based on their actions of imperialism or at the very least invasions.

i don't see why America would want the rest of the globe to be brought up to their level. perhaps it has to do with putting the American conusmers in debt to a deeper level making it easier to control the average american.

WHat do you really think the profit from the products we buy made in China goes for?

I think their government pockets much of it and it is being used to build up their military..

I think the U.S. wants the dollar to crash to push the new Amero on us.

"Ok, well your $$ is worth nothing now... sooo either be broke, OR you can switch to this new shiny Amero. (oh, and the NAU comes with that, btw.)"