Saturday, October 27, 2007

Not looking very good for the US Dollar

US Dollar Index hit the lowest level EVER recorded yesterday (USDX @ 76.977). Oil is currently at $92 (possibly $100 this year), Gold is at $784 (we'll see $800+ this year), and Silver at $14+ (we should see $20 silver this year).

Why? It's all related to the falling dollar and loss of investor confidence in the US Credit system. Everything we buy and use (with the exception of housing) will soon get much more expensive--milk, eggs, wheat, beef, fruits, metals, fuel, electricity, etc--Beer Included!!

What's next? The Fed will almost certainly cut rates again on the 31st of this month (in a futile attempt to rescue the banking and financial systems from the deepening credit crisis (actually it's an insolvency crisis--but that's for another day) and this issue (falling dollar/rising inflation) will become even more pronounced... The Fed is scared shitless right now... If they are unable to fix/reinflate the credit markets, we could have a DEFLATIONARY event (which leads to a Depression). In a panicked attempt to stave off this potential deflationary crisis, they will continue to lower short-term rates, print more money and pump liquidity into the banking systems (the very same banking systems that control the credit markets, which are completely seized up--due to all the toxic waste Asset Backed Commercial Paper products they can't seem to offload to some other sucker).

Bottom Line: Inflation will soon be out of control and there is absolutely nothing the Fed can do about it without crashing the economy ( Note: they should be raising short term Fed rates now to prop up the dollar, but that would lead to a major recession {ultimately the cure to our ills} but Gvt officials are unwilling to do this while the housing markets are cratering and with an election year right around the corner). Regardless, they are now pushing on a string in their attempt to reinflate the credit markets and their efforts will probably induce a HYPERINFLATIONARY event that will be followed by or experienced simultaneously with a MAJOR Recession. In several years the dollar will probably be worth 50-60% its current value and its fate as the defacto "World Reserve Currency" could soon be brought to question.

Hold on to your hats folks!

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