Wednesday, March 23, 2011

Dollar bearishness is at fever pitch...analysts and professors are misinformed

Below is just a sampling of all the people promoting dollar propaganda that is feeds the bearish dollar appetite. This is a partial list and I can point to many professors and guys with letters after their name who promote the same misinformed thesis. Please remember that letters behind your name did not halp most figure out how to price and model or understand the economy into 2007-2008 and they offer the same value now as they did then. The only one who acknowledges that is WAY in the future is Jim Rogers and he is too optimistic - however, he is long the dollar now FYI. He is the only one of this group who would stand much chance of making you money either. Right now the press is full-court headlining the impending death spiral of the dollar...every analyst is looking to beat up the dollar at the bottom with the exception of a few and the technicals and commercials are telling quite a different story. Commercials doubled net log positions on the dollar in one week..this is a very rare occurrence...
Investment Legends - “Dollar Collapse Inevitable”

Jim Rogers is a self-made billionaire, author of the best-sellers Adventure Capitalist and Investment Biker, and a sought-after financial commentator. Bill Bonner is the president and founder of Agora, Inc., a worldwide publisher of financial advice and opinions.
Peter Schiff is CEO of Euro Pacific Precious Metals ( and host of the daily radio show The Peter Schiff Show (
Jeffrey Christian is managing director of CPM Group ( and a prominent analyst on precious metals and commodities markets. CPM Group produces comprehensive yearbooks on gold, silver, and platinum group metals
Walter J. "John" Williams, private consulting economist and “economic whistleblower,” has been working with Fortune 500 companies for 30 years. Steve Henningsen is chief investment strategist and partner at The Wealth Conservancy in Boulder, CO
Frank Trotter is an executive vice president of EverBank and a founding partner of
Dr. Krassimir Petrov is an Austrian economist and holds a Ph.D. in economics from Ohio State University.
Bob Hoye is chief financial strategist of Institutional Advisors and writes Pivotal Events
The reality that there is a significant naked short on the dollar requiring covering and it will likely require a much stronger and longer rally in the dollar than people would possibly be expecting before the shoe, ultimately and way in the future, actually drops.

It is important to remember that in a debt money system, there is NO MONEY WHEN THERE IS NO DEBT, less debt available equals higher prices for cash. Debt is contracting at a much faster rate globally and domestically than the Fed can create it. Until people can come up with a way of a debt money system violating these rules then the pressure will be for a dollar shortage until such time as there is an official debasement and this will have to be a government decision and is not something that the fed has the capability, despite the impression that it may, to implement. There is NOT an infinite amount of debt that the Fed can purchase as you can see from the pressure being put on them and monetization is currently their primary way of new debt money. The reality is if you look at the housing numbers which are less than half the sales in 1960's when the population was 100+ million less...the banks are not creating credit, sovereign debt is defaulting and many other instruments are in the process. This creates a headwind of debt destruction that is much bigger than anything the Fed can throw at it. Therefore, in a debt money system, when there is plenty of new debt money, prices for cash will be weak. In a debt money system, no debt equals no money and therefore prices for cash will be strong. You can easily figure out which situation we are in.

Inflation is not the problem in this picture, its deflation and though the process of getting to where we are going is not a smooth path, we will get there. Various forces have created imbalances in the system and created price bubbles that people are mistaking for real credit inflation. But the money driving these asset bubbles does not have velocity and is coming from the monetization that the fed is doing which is really only benefiting a relatively small and isolated fraction of the economy. Hence, we do have fractured, artificial and temporary inflationary pressures in assets that entities who are directly accessing this Fed effort can use to make their balance-sheets look marginally better when marked to market. However, the most significant element of their portfolios still is based in the housing markets and as we have seem these portfolios are being torn to shreds. This is deflation due to shortages of new debt money available to artificially inflate prices.

The myriad of analysts and investors who can not understand this theorem or believe that the Fed and print unending amounts of new debt into existence are saddly totally misinformed, mistaken and in for a very very long ride indeed. This ride will make the bear's travails over the last 2 years look like a cake walk. One DOES NOT want to be owning commodities, stocks or any other inflationary or debt financed investment during this very long ride, though commodities do have utility and some should perform much better than stocks or municiple or corporate bonds.
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