Is The Us$ Destined To Collapse?

[sokal]

From Doug Casey.

In a surprise move, the World Trust Fund managed by Lazard Asset Management has dumped the U.S. dollar as its primary currency in favor of the pound sterling.

To quote the fund’s filing:

In response to comments from a number of shareholders and potential investors in the Fund about the liquidity of the Fund’s shares, the Board, having consulted with the Fund’s brokers, Arbuthnot Securities, believes that having a larger number of shares in issue with a lower share price than at present and changing the currency in which the shares are traded from US dollars to Sterling, should assist in improving the marketability and liquidity of the Fund’s shares and support the attraction and retention of a diverse shareholder base.

You’d think the fall in the U.S. Dollar Index since March (down from 89 to 75) has something to do with Lazard’s decision, but nevertheless, this is a stunning statement to read. Will other asset managers follow suit? Could it be a sign that the U.S. dollar is in jeopardy of losing its reserve currency status? Time will tell, but this is something we are going to keep a close eye on. And you should too.

[badge]

[...]

You'd think the fall in the U.S. Dollar Index since March (down from 89 to 75) has something to do with Lazard's decision, but nevertheless, this is a stunning statement to read. Will other asset managers follow suit? Could it be a sign that the U.S. dollar is in jeopardy of losing its reserve currency status? Time will tell, but this is something we are going to keep a close eye on. And you should too.

Nope. If they have any sense other fund managers wont be dumping USDs.

Its not a sign of impending reserve crncy status being lost, its a sign that the USD pessimism is going to consume itself.

Sadly these fund managers are flawed and fallible like the rest of us

[sokal]

[...]

You'd think the fall in the U.S. Dollar Index since March (down from 89 to 75) has something to do with Lazard's decision, but nevertheless, this is a stunning statement to read. Will other asset managers follow suit? Could it be a sign that the U.S. dollar is in jeopardy of losing its reserve currency status? Time will tell, but this is something we are going to keep a close eye on. And you should too.

Nope. If they have any sense other fund managers wont be dumping USDs.

Its not a sign of impending reserve crncy status being lost, its a sign that the USD pessimism is going to consume itself.

Sadly these fund managers are flawed and fallible like the rest of us

Everyone is all ass backward with the USD.

The currency market and macroeconomic gurus are the ones that are bearish on the dollar.Its only a contrarian play is to be bullish on the dollar within the currency crowd.

The mainstream investors and day traders are bullish on the dollar (evident in 2008 when they all piled into the dollar when the market crashed) So if the market is going to crash again then the contrarian play is actually to be bearish on the dollar.

[lannarebirth]

[...]

You'd think the fall in the U.S. Dollar Index since March (down from 89 to 75) has something to do with Lazard's decision, but nevertheless, this is a stunning statement to read. Will other asset managers follow suit? Could it be a sign that the U.S. dollar is in jeopardy of losing its reserve currency status? Time will tell, but this is something we are going to keep a close eye on. And you should too.

Nope. If they have any sense other fund managers wont be dumping USDs.

Its not a sign of impending reserve crncy status being lost, its a sign that the USD pessimism is going to consume itself.

Sadly these fund managers are flawed and fallible like the rest of us

Everyone is all ass backward with the USD.

The currency market and macroeconomic gurus are the ones that are bearish on the dollar.Its only a contrarian play is to be bullish on the dollar within the currency crowd.

The mainstream investors and day traders are bullish on the dollar (evident in 2008 when they all piled into the dollar when the market crashed) So if the market is going to crash again then the contrarian play is actually to be bearish on the dollar.

Don tink too mut:

[Abrak]

My view tells me that the US has acted irresponsibly for a long time now.

Their answer to print more & more fiat in ever increasing insane amounts logically must have a reaction. The fact that they now one way or another....openly or secretly through banks buy their own markers can only go on for so long.

So I agree that the dollar is very much so overvalued.

I will not be surprised to see it in the low 60's next year. I have no idea nor answers for what would be the cure other than to let it collapse & default on their outstanding debts bringing with it the appropriate responses from the rest of the world. At least at that point a true recovery could begin....granted if it is not based on the same faulty policies.

Well my view is slightly more along the lines that you dont get a druggie without a drug dealer.

The US only ended up with no savings because someone was saving for them. How else do you have zero interest rates no savings and twin deficits. And you dont need to worry about default - if the dollar was to fall 30% that would be a quasi default of US$1trn. I think the biggest default to date is Argentina at US$80bn.

And when some says that the USA accounts for a 1/3rd of global consumption that is part of the problem when they only account for 22% of GDP.

[mommysboy]

My view tells me that the US has acted irresponsibly for a long time now.

Their answer to print more & more fiat in ever increasing insane amounts logically must have a reaction. The fact that they now one way or another....openly or secretly through banks buy their own markers can only go on for so long.

So I agree that the dollar is very much so overvalued.

I will not be surprised to see it in the low 60's next year. I have no idea nor answers for what would be the cure other than to let it collapse & default on their outstanding debts bringing with it the appropriate responses from the rest of the world. At least at that point a true recovery could begin....granted if it is not based on the same faulty policies.

Well my view is slightly more along the lines that you dont get a druggie without a drug dealer.

The US only ended up with no savings because someone was saving for them. How else do you have zero interest rates no savings and twin deficits. And you dont need to worry about default - if the dollar was to fall 30% that would be a quasi default of US$1trn. I think the biggest default to date is Argentina at US$80bn.

And when some says that the USA accounts for a 1/3rd of global consumption that is part of the problem when they only account for 22% of GDP.

Part of the problem is everything and everywhere is overvalued!!!! to the tune of about 30%

US and UK have at least been devalued to a certain extent.

I agree with Abrak to a certain extent too but he does remind me of a nutty professor! Abstraction personified.

[Naam]

Well my view is slightly more along the lines that you dont get a druggie without a drug dealer.

The US only ended up with no savings because someone was saving for them. How else do you have zero interest rates no savings and twin deficits. And you dont need to worry about default - if the dollar was to fall 30% that would be a quasi default of US$1trn. I think the biggest default to date is Argentina at US$80bn.

And when some says that the USA accounts for a 1/3rd of global consumption that is part of the problem when they only account for 22% of GDP.

correct, but only in the league of sovereign debtors. corporate General Motors beat Argentina by lengths.

[david96]

The AUD is now at about 0.92USD or 30THB. Exporters lose, Importers gain, but we import more than we export. The US should be able to export more with a low dollar and this makes imports dearer.

You could be an importer and an exporter. A high AUD and imports increase. The secret is balance which is difficult. "Hot" money should be controlled and regarded a time deposit when invested in foreign countries.

Australia has borrowed a lot of money from overseas.

And do not take any notice of "politicians" and "economists" they are paid to say the right things. They cannot tell the truth, because the people do not want to hear the truth.

Australia is yet to have its "recession" just be patient.

[teletiger]

The USA first "defaulted" in 1933. 38 years later the USA "defaulted" again, 1971. 'And here we are 38 years on from then, looking that same devil in the eye.

What is it about 38 years? Some sort of cycle it seems.

The use of "inverteds" was deliberate. Calling it anything else is just symantecs.

Regards.

[Abrak]

By the way is there a site that tells you who is buying USTs.

I mean it would just seem crazy to me given both a currency risk and an interest rate risk. And they are issuing US$2trn, 4x last year when Japan and China consumed 80%.

They are not going to the banks who have shrunk assets US$1trn. The Fed is only buying US$300bn. who is buying the rest?

[flying]

The Fed is only buying US$300bn. who is buying the rest?

There are many articles some quite recent.

I think Nov is going to be an interesting month.

http://www.dailymarkets.com/economy/2009/0...a-ponzi-scheme/

http://www.absolutereturn-alpha.com/Articl...this-money.html

http://meganmcardle.theatlantic.com/archiv...ereign_debt.php

[flying]

The USA first "defaulted" in 1933. 38 years later the USA "defaulted" again, 1971. 'And here we are 38 years on from then, looking that same devil in the eye.

What is it about 38 years? Some sort of cycle it seems.

The use of "inverteds" was deliberate. Calling it anything else is just symantecs.

Regards.

I mentioned that a few weeks ago to jazzbo? I think.

Maybe it was in the gold thread......

Anyway he was incredulous that it was silly & that the US has never defaulted.

You know most seem to forget that the USD was a note redeemable for real money

Today it is a FED legal tender backed by.............?

In 1934 no gold backing now it is just....lawful money because they say so

"This Note Is Legal Tender For All Debts Public And Private And Is Redeemable In Lawful Money At The United States Treasury Or At Any Federal Reserve Bank".

Really what it means is that it is redeemable for lawful debt because the FED does not print money <sic> They print debt ....they are not alchemist. They print debt notes & then sell the counterpart/treasury bonds to supposedly give this legal debt power.

They actually started as soon as the FED started in 1913

They slowly started switching the bait....

"Secured By United States Certificates Of Indebtedness Or One-Year Gold Notes, Deposited With The Treasurer Of The United States Of America". The Note was directly redeemable in Treasury debt, but it was not directly redeemable in Gold.

Your right though...When I first saw those dates I was a bit surprised. It is either a 38 year cycle or perhaps Fiat Currency only has a shelf life of 38 years?

[henryalleman]

If you have some historical knowledge you can see clearly the similarity's between the decline of the Spanish empire and the present situation of the US.

Arrogant Imperialistic states

costly wars

an political powerfull military industrial complex

huge trade deficit

huge balance deficit

religious fanatism

a home consumer market who is based on borrowed money and debts.

The difference?

The Spanish empire existed a few hundred years , while the US world domination will only last a few decades.

Therefore the US$ and economy will decline and maybe even collapse.

[badge]

DXY has support at 75.6, 74.5 and 74

Since the 74.95 low has givn way to a new low(74.94), previously cited DXY supports in play again.

[SNGLIFE]

The dollar is a lead balloon. Holding 50% in gold with a great big smile. Looking to increase to 75% WHEN the panic de-leveraging happens again like it did last year. Gold was tossed out with the bathwater then, and hopefully it will do the same again. It's been shining ever since and getting shinier everyday we have a US debt auction! =D

The fundamentals look GREAT for gold! $2,000 before the end of next year. It's inevitable with all the QE and deficit spending driving the dollar into the dirt. AND there seems to always be some unexpected perennial 'oh shyt' financial event over the past few years during the Bush era. Seems to be a pattern now that likely will not stop with a change of Administrations. MORE MORE MORE! =D

[soundman]

In-correct asumption and numerous replies removed.

In future, to bring a post to the moderator's attention, please use the report button rather than having a cyber fit in the forum.

[badge]

Thank you Moderator. I was just about to condemn it, in less eloquent terms

[badge]

Alex lah?

http://k2afileburst.fileburst.com/trade1/trade1.html

[flying]

Wonder what Captain Harmonica is thinking today?

[Naam]

Wonder what Captain Harmonica is thinking today?

he thinks "the resident suckers will soon forget what i posted. at the first sign of a $ and ¥ recovery i will be back and present my usual bullshit."

[flying]

Wonder what Captain Harmonica is thinking today?

he thinks "the resident suckers will soon forget what i posted. at the first sign of a $ and ¥ recovery i will be back and present my usual bullshit."

[badge]

Ive no doubt Capt. HArkmonica will be back, and with DXY at 74.68, perhaps sooner than later

This site allows banks to auction for your cash.

https://www.maxbips.com/depositor-auction-demo.html

[flying]

Looks like they had good timing/luck

Iran gains $5b on dollar to euro shift

[AlexLah]

Alex lah?

http://k2afileburst.fileburst.com/trade1/trade1.html

Heh, heh, keep looking find out the reason.

[Abrak]

Looks like they had good timing/luck

Iran gains $5b on dollar to euro shift

Or you have to wonder whether this is new global accounting speak. As in China has made US$50bn by converting US$1trn USTs into Euro.

[waza]

Whether Dubai debt is a just a catalyst and excuse for profit-taking, something more fundamental, or a set-up for the Lou Ciphers of big-money programs sprung to trap the majority of fund managers sitting fat and happy and waiting for the obvious trend higher, doesn’t much matter at this point -- it is what it is. The trigger for an unwind of the dollar carry/risk trade has been squeezed off. And isn’t it special that the "redistribution" of wealth trade occurred while the US was stuffing its face. Jeffrey Cooper Nov 27, 2009 9:05 am

[Abrak]

Whether Dubai debt is a just a catalyst and excuse for profit-taking, something more fundamental, or a set-up for the Lou Ciphers of big-money programs sprung to trap the majority of fund managers sitting fat and happy and waiting for the obvious trend higher, doesn’t much matter at this point -- it is what it is. The trigger for an unwind of the dollar carry/risk trade has been squeezed off. And isn’t it special that the "redistribution" of wealth trade occurred while the US was stuffing its face. Jeffrey Cooper Nov 27, 2009 9:05 am

Well I really have to disagree.

The Dubai GDP is (or was) US$40bn. So while the BoT (that stands for Bank of Thailand) is suppressing its currency by holding US$50bn of the country's deposits (17% of the money supply) on its balance sheet doing nothing in order to suppress its currency, there will be many people who see the dollar carry trade as a one way option.

In other words it can continue to issue Thai baht bonds and accumulate reserves while suppressing the money supply in increasing amounts or people will go on shorting the dollar and buying baht until it gets so ridiculously expensive for the BoT they allow the currency to appreciate.

The trigger for the dollar carry/ risk trade is incredibly easy to see - and that is the revaluation of the Yuan/RMB. There maybe some short term profit taking but Dubai's inevitable collapse isnt going to reverse the long term trend. Investors will simply do it until it happens at which point, even if sterilization has left the BoT with 60% of Thailand's deposits and forex reserves of over 150% of GDP, Thailand will revalue. So, yeah, Dubai might be a little bit of profit taking at the end of the year, but lets not forget it is a bit player in the scheme of things.

And lets not pretend whats at stake here - people are playing for far bigger money. Thailand has US$50bn in sterilization and US$150bn in reserves (including futures) - about 70% of GDP. A 10% revaluation will cost it US$5bn in sterilization and US$10bn in reserves (say 7% of GDP.) If you want to keep this game going especially against Bernanke and sterilize another US$100bn of inflows, then fine, we will play the game but the cost will probably be 15% of of reserves equivalent to 100% of GDP. At which point this ridiculous game costs Thailand, as a percent of GDP, more than the debt crisis costs America.

And the game is not just Thailand, it is Malaysia, Korea even the Philippines.

So honestly if you believe that Dubai is going to be a trigger to allow Thailand to unwind 17% or its money supply and Malaysia 20% you really dont understand the game. The game has already been played and we already know who has won and lost.

P.S. And dont think forex controls will change anything either because you only accelerate the end game, rather than unwind your position.

Edited November 27, 2009 by Abrak

[jazzbo]

The trigger for the dollar carry/ risk trade is incredibly easy to see - and that is the revaluation of the Yuan/RMB... The game has already been played and we already know who has won and lost.

WE?

[Naam]

The trigger for the dollar carry/ risk trade is incredibly easy to see - and that is the revaluation of the Yuan/RMB... The game has already been played and we already know who has won and lost.

WE?

we=those who know. you and me do not belong to that group

[jazzbo]

I just assumed 'WE' includes George S., Stanley D., Jim R., and the assorted Kuhns herein with whom they swap tales.