Long time readers will recall I have been worried about the Dollar for a long time. I recall back in the late 70′s telling friends and customers to buy German Marks, Swiss Franks, or gold as inflation was going to do serious damage to it’s value. Today it is not inflation that we need to worry about, rather stagflation. Economists and pundits are talking about whether we will have inflation or how much we will have. The real enemy is deflation, or perhaps stagflation.
chart compliments of Jim Sinclair at www.jsmineset.com
All of these terms are overused and misunderstood. Without getting into a discussion about definitions, let me say that the enemy of the Dollar today is debt. The US has issued to much of it. The foreseable future promises much more. Our trading partners are worried and are saying so in word and deed. Some experts say the rest of the world is stuck with Dollars so we are OK. Not so simple. In 1900 the British Pound was the reserve currency and the sun never set on the British Empire. It was Rule Brittania. The Queen’s yacht is still called Brittania, but that is all that is left of the empire. People and nations always have choices, they may not be good choices, but choices they are.
No one knows what will happen in the currency market with any certainty, else there would be no futures, but for you traders out there, check out this chart and draw your own conclusions.
