Plunging Dollar- What, Me Worry?
By Dr. Russell McDougal
Dear Reader,
Admittedly, I’ve been hammering at U.S. dollar problems for going on a year now at IDE. It has certainly cooperated with my projections to date. What exactly does it mean to you now and in the future? Let’s go there.
The Dollar Index is best known as the USDX. Since its inception in 1972, it has fallen below the 80 level only a few times. It has recently been there again.
You can relax. I’m not going to put up all the horrifying historical long-term dollar charts this week.
At some point, the dollar should appreciate against global currencies over the very short term, mostly because dollar bears have been so handsomely rewarded recently. They now have to buy the dollar back to lock in the fruits of their labors. We’ll get what’s known as a “short covering rally.” Then it will resume the trend toward its underlying value of zero.
The dollar is actually exceeding my expectations … to the downside. Should you care? This currency stuff is pretty esoteric and confusing. Let’s look into a few ways in which the local currency woes are set to impact your life. There’s gotta be a bright side, right?
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A plunging dollar is definitely not all bad. In some ways it presents glorious opportunities. Here are four such scenarios.
#1: Exotic Travel - With a withering dollar, travel to typical places such as the British Isles, France, Germany, Australia, New Zealand, or Japan will no longer be Clark Howard recommendations. They are unaffordable, unless you’re into camping and MREs. The incredible shrinking dollar will dictate different travel plans.
You will want to travel only to countries with a more poorly managed currency than that put out by the Federal Reserve. Pretty restrictive, but there’s little need to fret about having to stay home. After all, how many of your peers have ever been to Zimbabwe, Haiti, Nicaragua, Pakistan, or the Democratic Republic of Congo? These glorious destinations will welcome you and your greenbacks for the foreseeable future. Your friends will be in awe.
You can also save up for a while and visit Mexico … if they allow you to cross the border. Besides, they aren’t likely to ever know the difference anyway. Who pays attention to this sort of monetary nonsense outside our borders?
Yep, the world will definitely be welcoming Americans to new travel locations.
#2: Tidier Homes - Talk about clutter. Check the labels on your best friend’s furniture, clothes, and knickknacks. Coffee tables from Indonesia, plasma TVs from Japan, suits from India, and most everything else from China. Why not? They’ve been practically giving the stuff away for well over a decade. Combine that with cheap credit and who could say no? With such easy money, the items wear out before the first payment is ever due. Where are the minimalists?
No mas! I’m more than tired of those who repeatedly complain that the U.S. no longer exports anything of substance. Serfs around the globe, hungry for their own cars, TVs, and refrigerators, have worked like slaves for decades to get their share of our biggest exports - dollars and debt. It’s not our fault that pretty green paper fascinates foreigners.
I guess those days are now pretty much over. The New York and DC boys have pushed the envelope a tad too much with their recent packaged sewage in the form of subprime debt amongst the regular toxic stuff. Just when it looked like the paper dollar scam would last indefinitely. What an ingenious lot.
If foreigners no longer want our fancy paper, I guess we won’t get their shiny products on the cheap. Bummer! Fewer things to trip over, though.
#3: Much Less Temptation - The crashing dollar will eventually require higher interest rates to make it even mildly appealing to foreigners. Jimmy Carter-style rates are heading our way in spite of the recent Bernanke actions. You’ll have much less temptation to consume. Food included. A svelte new America awaits.
You won’t be tempted to buy a McMansion. You won’t be tempted to take an ocean cruise, though local lakes, ponds, and rivers will still be in play. Your cosmetic surgery will have to be off the table. Your kids will somehow survive without their summer camp birthright. Your vacation home will consist of the old sofa, a DVD, and some takeout pizza … in the garage or the permanently parked Suburban.
These privileges will soon go the way of the current global reserve currency, aka the dollar. It was a good run.
With these temptations eliminated, Americans will turn their attention to more traditional forms of entertainment. Maybe we’ll get another Baby Boom and some warm (working) bodies to pay the government’s old-age promises.
#4: The Return of U.S. Manufacturing - I am exceedingly weary of those idiot pundits continually complaining about the downfall of U.S. manufacturing. Lost jobs to China, Mexico, India, or wherever. They are so shortsighted. The paper scam may be over globally, but there will be no end to American know how.
The U.S. will soon return to rebuilding our economy on a stable base of local production. You won’t see a problem there.
There are still items we manufacture that you’ll view nowhere else in the world. Have you been to South Beach, Huntington Beach, or Long Beach lately? “Go big or stay home” is apparently the motto. Have you checked out the eternally young-looking Hollywood set? All have “made in America” stamped all over them. Makes ya proud, no?
The American Society of Plastic Surgeons and their growing membership are set to carry the national load. I’m just wondering how future GDP is to be measured.
Rich foreigners from around the globe will bring their coveted currencies to the U.S. and undergo transformation. The cheap medical clinics of India, Mexico, or Costa Rica will soon have profound competition.
Item #4 may cancel out item #3 but … the world is gonna be a much more beautiful place!
The dollar is certainly suffering. Should you be concerned about your financial future? I really don’t think so. The U.S. has much more going for it than just the four key factors mentioned above. Everything is under control.
I have elitist contacts as well as natural resource contacts. I’m privy to inside information about the Fed. They have a secret mastermind set to rebuild our Republic. No worries.
Invest Resourcefully,
Rusty
P.S. To let me know what you thought of today's article, send an e-mail to: feedback@investorsdailyedge.com.
[Ed. Note: Dr. Russell McDougal has dedicated years of study and investing in the natural resources exploration sector. During that time he has closed out DOZENS of gains of 500%... 1,000%... 2,000% and more! Currently he is sitting on multiple thousand percent winners, including one stock that is up a whopping +5,000%. And for a select group of investors, Rusty has agreed to share his secrets of success... and his top stock recommendations. Click here to learn more... ]
Stop Drooling on Yourself!
By Dr. Russell McDougal
The Fed sycophants are salivating all over themselves with recent interest rate cuts. It’s never enough, though, and one cut begs another. Let the good times roll. Maybe, on the other hand, it would be better to query exactly why interest rates are being lowered.
When excess debt and too much money is sloshing around in the system, that’s the time to be raising interest rates. Lowering rates at such a time amounts to throwing expensive gasoline on the fire. Watch the result to the U.S. dollar.
In the Federal Reserve’s ongoing boom and bust cycles, we’re now once again looking at really ugly times. Interest rates are being cut exactly at a time when they should have been raised. Wringing out recent excesses was the order of the day.
These cuts are designed out of sheer desperation. Banks and debtors are in historic trouble. It’s easy money “rescue time” once again. Al was easy, but Madame Ben’s a big spender.
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