Strange day….

[hipmatt]

OK, the bailout plan is going through… 700b US $ will be printed from nothing… and the dollar is significantly stronger. The dow is currently down over 230, dollar is still stronger. Gold is up again, dollar is stronger. Another US rate cut is expected. We can’t print money fast enough over here, and people still expect a huge recession, and the dollar has gotten stronger. Am I confused about what I’ve learned about currencies……??????????

[(former)FormerSanDiegan]

Business cycle phasing (US hits bottom first and presumably recovers first while rest of world lags), or anticipation thereof would tend to lead to dollar strength at what intuitively should be a weak point in time.

The dollar simply sucks less than the currencies it is being compared to (e.g.Euro). The U.S. is much further along in this down cycle/recession than the rest of the World (which until a few months ago was assumed by many to be “decoupled”).

[(former)FormerSanDiegan]

Business cycle phasing (US hits bottom first and presumably recovers first while rest of world lags), or anticipation thereof would tend to lead to dollar strength at what intuitively should be a weak point in time.

The dollar simply sucks less than the currencies it is being compared to (e.g.Euro). The U.S. is much further along in this down cycle/recession than the rest of the World (which until a few months ago was assumed by many to be “decoupled”).

[(former)FormerSanDiegan]

Business cycle phasing (US hits bottom first and presumably recovers first while rest of world lags), or anticipation thereof would tend to lead to dollar strength at what intuitively should be a weak point in time.

The dollar simply sucks less than the currencies it is being compared to (e.g.Euro). The U.S. is much further along in this down cycle/recession than the rest of the World (which until a few months ago was assumed by many to be “decoupled”).

[(former)FormerSanDiegan]

Business cycle phasing (US hits bottom first and presumably recovers first while rest of world lags), or anticipation thereof would tend to lead to dollar strength at what intuitively should be a weak point in time.

The dollar simply sucks less than the currencies it is being compared to (e.g.Euro). The U.S. is much further along in this down cycle/recession than the rest of the World (which until a few months ago was assumed by many to be “decoupled”).

[(former)FormerSanDiegan]

Business cycle phasing (US hits bottom first and presumably recovers first while rest of world lags), or anticipation thereof would tend to lead to dollar strength at what intuitively should be a weak point in time.

The dollar simply sucks less than the currencies it is being compared to (e.g.Euro). The U.S. is much further along in this down cycle/recession than the rest of the World (which until a few months ago was assumed by many to be “decoupled”).

[peterb]

Lots of economic history on credit bubble’s bursting: Senior currency rises about other currencies (US$). Gold is seen as a safe store of value as all central banks start to get creative in an effort to stave off the contraction. Look for the stock market to really crater in October.
Rising unemployment will destroy so much demand that the real CPI could get to 0%.

[peterb]

Lots of economic history on credit bubble’s bursting: Senior currency rises about other currencies (US$). Gold is seen as a safe store of value as all central banks start to get creative in an effort to stave off the contraction. Look for the stock market to really crater in October.
Rising unemployment will destroy so much demand that the real CPI could get to 0%.

[peterb]

Lots of economic history on credit bubble’s bursting: Senior currency rises about other currencies (US$). Gold is seen as a safe store of value as all central banks start to get creative in an effort to stave off the contraction. Look for the stock market to really crater in October.
Rising unemployment will destroy so much demand that the real CPI could get to 0%.

[peterb]

Lots of economic history on credit bubble’s bursting: Senior currency rises about other currencies (US$). Gold is seen as a safe store of value as all central banks start to get creative in an effort to stave off the contraction. Look for the stock market to really crater in October.
Rising unemployment will destroy so much demand that the real CPI could get to 0%.

[peterb]

Lots of economic history on credit bubble’s bursting: Senior currency rises about other currencies (US$). Gold is seen as a safe store of value as all central banks start to get creative in an effort to stave off the contraction. Look for the stock market to really crater in October.
Rising unemployment will destroy so much demand that the real CPI could get to 0%.

[ucodegen]

You are thinking that only ‘printed’ dollars are part of the money supply. They aren’t. All leveragable assets are. This includes homes. With values in homes down, the home ATM is also down.

The inflation occurred during the run-up in home prices. People would extract (convert to money) any significant gain in the value of the home.

Now all values in homes have dropped significantly, many time leading to foreclosure where the bank has to recognize the drop in value. The crash of housing and several resulting banks has resulted in a reduction of the real money supply.

[ucodegen]

You are thinking that only ‘printed’ dollars are part of the money supply. They aren’t. All leveragable assets are. This includes homes. With values in homes down, the home ATM is also down.

The inflation occurred during the run-up in home prices. People would extract (convert to money) any significant gain in the value of the home.

Now all values in homes have dropped significantly, many time leading to foreclosure where the bank has to recognize the drop in value. The crash of housing and several resulting banks has resulted in a reduction of the real money supply.

[ucodegen]

You are thinking that only ‘printed’ dollars are part of the money supply. They aren’t. All leveragable assets are. This includes homes. With values in homes down, the home ATM is also down.

The inflation occurred during the run-up in home prices. People would extract (convert to money) any significant gain in the value of the home.

Now all values in homes have dropped significantly, many time leading to foreclosure where the bank has to recognize the drop in value. The crash of housing and several resulting banks has resulted in a reduction of the real money supply.

[ucodegen]

You are thinking that only ‘printed’ dollars are part of the money supply. They aren’t. All leveragable assets are. This includes homes. With values in homes down, the home ATM is also down.

The inflation occurred during the run-up in home prices. People would extract (convert to money) any significant gain in the value of the home.

Now all values in homes have dropped significantly, many time leading to foreclosure where the bank has to recognize the drop in value. The crash of housing and several resulting banks has resulted in a reduction of the real money supply.

[Author]

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