Tuesday, November 15, 2011

The market problem is too many Fiat IOU’s...

The issue is that the global financial system has allowed great magnification of its money creation mechanisms to be directly translated into credit which is then spent as money. The problem IS NOT fiat money - its the credits that amplify the fiat money. For this reason we have too many assets and at way too high of prices with artificial demand impulses driving them. Therefore, this markets performance will not be based, in the near-term, on financial performance of a company or even a product or commodity - but the ability for people to obtain the currency and purchasing power with which to acquire said instrument.

In short, equity and commodity markets can idealize all that they want, but the trade in them will be governed by the root of our problem - access to currency and purchasing power.

At this time, people are still watching relatively deformed triangle patterns in very crappy looking equity market trading. Those patterns, in addition to being deformed are not correlated to anything remotely inverse in the dollar. The dollar setup is just plain bullish and the EURO is clearly in the midst of a large move down that is not likely to be interrupted by much…other than a Goldman Tax Short recommendation I guess.

I will post some charts, but its my recommendation that people trade with an edge towards the direction of the Dollar, Euro and Aussie Dollar.
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