Don’t know how many of you saw this but the dollar hit an all time low against the euro. Gold prices have not been this high in over 25 years, and the dollar has never bought so little oil.
For this we have the Fed to thank for the latest cuts in rates. Banks will be able to access lower lending rates but I find it hard to believe that these lower rates will be passed on to the consumer. The banks know the consumer is in trouble and hence will not extend the easy credit.
At the same time with the lowering of the rates the fed has the put the dollar into a tailspin. So at the time when the consumer needs access to credit, the value of his dollars are declining- or another way to put it everything has gotten more expensive.
The best way to define inflation is: too much money chasing too few goods. When the fed lowers rates, all it is doing is creating more money. The fed use to publish M3 ( which shows how many money was in circulation), but no more. The feds have stopped reporting M3 – hoping that the markets won’t notice.
The one benefit that we now have because of a cheap dollar is that our housing looks cheap to foreigners. Miami, New York and Las Vegas might be able to survive the housing rout, but somehow I don’t see foreigners buying up real estate in US cities they have never visited.
Best advise for now: pay down your debts and buy some gold.
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