Five Things: The Dollar is Doomed
By Kevin Depew Sep 08, 2009 3:48 pm
I know this because I have read it everywhere over the past few weeks.
The Dollar is Doomed... Macro Forecasting Isn't for the Gutless... The Dollar, Technically... How to Handle the Point of Recognition... Twitter Reveals a Longing for Depth by Virtue of its Absence.
The dollar is doomed. I know this because I have read it everywhere over the past few weeks...
UN Wants New Global Currency to Replace Dollar
- Telegraph (UK)
- Wall Street Journal
Dollar Hits Low for Year as Gold Tops $1,000
- Associated Press
Pimco Says Dollar to Weaken as Reserve Status Erodes
- Bloomberg
Wait, that's not true. I haven't read this over the past few weeks; it's been over the past few years. Longer than that, really. But never mind how long it has been coming, what is important is that it is finally here. The question, then, is what comes next:
Here's the most likely scenario. In the next recession, it will appear that deflation and unemployment are threatening the public welfare. Washington will react in panic fashion to attack the problem by cranking up the money and spending machine to "stimulate" the economy - a bit of the "hair of the dog that bit us." These distortions in the economy, and the dollar floods coming from the printing press, will cause Americans to distrust their own paper currency and get rid of it as fast as they can in an orgy of spending...
It's an interesting thesis, to be sure. And it could still play out that way. After all, that passage was written 30 years ago by Howard J. Ruff in his 1979 book, "How to Prosper During the Coming Bad Years."
You might have missed it the first time around if, like me, you were just a little kid, in which case, friend, do I have good news for you, an updated version of Ruff's classic, "How to Prosper During the Coming Bad Years... in the 21st Century," was released just last year.
Reading the headlines over the past few weeks, the timing looks good. And I guess that's really the point: the mere fact that the timing looks good is probably the chief reason that it isn't.
Look, I understand. The macro-economic book publishing business is not for the weak-kneed and gutless. You have to be flexible, adaptive, able to change your position when it is clear you are wrong. Which is the only way you can get a boldly optimistic book like this one, published in 1999...
The Roaring 2000s: Building The Wealth And Lifestyle You Desire In The Greatest Boom In History
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Followed immediately by this one, published by the very same author, in 2009...
The Great Depression Ahead: How to Prosper in the Crash Following the Greatest Boom in History
At least he's got all his bases covered.
To be fair, I have my own far-ranging macro-economic thesis, but I also have the good sense not to try and charge anyone for it since, by definition, once you accept money for a point of view you're totally and absolutely committed to selling it... come hell or high water, and no matter whether it's right or wrong.
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2009-09-08 16:17:49
deflationary point of recognition -
today's reported HUGE drop in consumer credit for july, plus an over 50% revision increase in the drop of same for june, shows somebody's seen that point of recognition, even if it isn't the market ;-)
2009-09-08 16:18:44
Exhaustion
Kevin,
Enjoy your writing and clearly see what you are writing about. I believe we will have a funding crisis coming sooner rather than later(24 months). Why are you so sure the dollar will bottom in here or near the 72 low? Why cant the dollar break below 72 and start a new leg down?
Thanks,
Steve
Enjoy your writing and clearly see what you are writing about. I believe we will have a funding crisis coming sooner rather than later(24 months). Why are you so sure the dollar will bottom in here or near the 72 low? Why cant the dollar break below 72 and start a new leg down?
Thanks,
Steve
2009-09-08 16:43:54
twitter ulysses yes yes yes
i've enjoyed and hope to enjoy the various arts we humans have dreamed up since, well, since i can remember making mud somethings in a water filled rut in the road in front of my grandmother's house...
from haphazard exploration, to structured classes, through varied various art forms, i've explored painting, sculture, writing, music, dance; images, sounds, words, and movements -
i don't recall at least liking everyone of them, and still can find a peaceful brain smile in memory of something done long ago (square dancing, finger painting, stretching, making ooommmm sounds, oh, and that ceramic full size garbage can in my first clay class :-)
not counting the fun doing all this, the thing i became aware of, was the feelings by those attached to a particular art form being displaced, or that'd been (kinda) displaced, by a newer or different version -
i personally don't fear any art form disappearing, at least disappearing all together -
twitter, to me, is a mass email which some say replaced the phone call which cut back on letters written which some complain replaced the inperson visit to chat which might've responed to the end of the extended household which joyfyully broke from the communal village where a town crier voiced the mass email, uh, sorry, mass news items ;-)
but not one of these activities has been eliminated, and town hall meetings are being tweated as they happen...
projected moving images from a phone (or other tiny gadget) might end up replacing (in attendance) the tv which subbed for the big screen which flattened the stage which sprung from our childhood playacting - but children still play, if allowed...
i don't have the nuances down, or variations identified, but like drawing wasn't doomed by painting which hasn't been buried by photography while all are benefiting from textured canvas printing with pixel resolutions smaller than the human eye can distinguish (while waiting for holograms to have their day), people will continue remembering how to cook both slow and quick, bathe or shower, and yes kiss while making love....
from haphazard exploration, to structured classes, through varied various art forms, i've explored painting, sculture, writing, music, dance; images, sounds, words, and movements -
i don't recall at least liking everyone of them, and still can find a peaceful brain smile in memory of something done long ago (square dancing, finger painting, stretching, making ooommmm sounds, oh, and that ceramic full size garbage can in my first clay class :-)
not counting the fun doing all this, the thing i became aware of, was the feelings by those attached to a particular art form being displaced, or that'd been (kinda) displaced, by a newer or different version -
i personally don't fear any art form disappearing, at least disappearing all together -
twitter, to me, is a mass email which some say replaced the phone call which cut back on letters written which some complain replaced the inperson visit to chat which might've responed to the end of the extended household which joyfyully broke from the communal village where a town crier voiced the mass email, uh, sorry, mass news items ;-)
but not one of these activities has been eliminated, and town hall meetings are being tweated as they happen...
projected moving images from a phone (or other tiny gadget) might end up replacing (in attendance) the tv which subbed for the big screen which flattened the stage which sprung from our childhood playacting - but children still play, if allowed...
i don't have the nuances down, or variations identified, but like drawing wasn't doomed by painting which hasn't been buried by photography while all are benefiting from textured canvas printing with pixel resolutions smaller than the human eye can distinguish (while waiting for holograms to have their day), people will continue remembering how to cook both slow and quick, bathe or shower, and yes kiss while making love....
2009-09-08 17:03:18
Dropin' and Popin'?
Pepe,
If the market starts a dropin', the dollar will be a popin'
No velocity, no inflation. Maybe later.
debt reduction=dollar strength
Let's see if we make the classic head and shoulders in the SP500...
If the market starts a dropin', the dollar will be a popin'
No velocity, no inflation. Maybe later.
debt reduction=dollar strength
Let's see if we make the classic head and shoulders in the SP500...
2009-09-08 17:07:02
I am starting to feel more and more positive about the United States. Yes, we must go through the rough time but at least we know it is here and that it does not last forever.
We need to have this to get going again in a sustainable manner. The government can try whatever it wants, but the market always wins.
I agree that the dollar and the market will rally together though Toddo disagrees.
One thing though... How will people enjoy their hobbies and family more when they are trying to scrounge up a job all day long?
We need to have this to get going again in a sustainable manner. The government can try whatever it wants, but the market always wins.
I agree that the dollar and the market will rally together though Toddo disagrees.
One thing though... How will people enjoy their hobbies and family more when they are trying to scrounge up a job all day long?
2009-09-08 17:56:03
Oops..too much Twitter. Let's try again:
Well, they will at least be forced to spend more time with them, enjoy remains to be seen.
Well, they will at least be forced to spend more time with them, enjoy remains to be seen.
2009-09-08 18:03:42
twitter ulysses yes yes yes
I almost wish I had read Ulysses... or maybe not.
Almost everything hyped up as "great literature" turns out to be a too long version of "life is unfair and complex and then you die". See, I could have Tweeted that thought. Try that with War and Peace.
Also, I get very amused when people complain that they are just too dang thoughtful to use Twitter. It's easy to babble on in endless paragraphs. Editing your thoughts is a much harder business (to which my posts are evidence).
Almost everything hyped up as "great literature" turns out to be a too long version of "life is unfair and complex and then you die". See, I could have Tweeted that thought. Try that with War and Peace.
Also, I get very amused when people complain that they are just too dang thoughtful to use Twitter. It's easy to babble on in endless paragraphs. Editing your thoughts is a much harder business (to which my posts are evidence).
2009-09-08 18:16:35
In a (slight) defence of Harry Dent
Those covers make a good laugh side by side. Sadly, however, parts of his books do make sense if you crack them open.
The thesis is this: economies are fed by their underlying populations, specifically, those who have achieved their highest earning power in the age 45-55ish range. You can back test highs in the DOW for the last 100 years or so and they correspond with population bubbles within this age range. From this point of view, the Roaring 20's and subsequent Great Depression in the US was fed by the massive influx of immigrants in 1890-1900, who reached their peak earning years in the 20's.
The boomers would have been one of the largest population bubbles the world as seen, and therefore, using this theory, it was very easy to predict both boom and bust. If you followed Dent's advise, you would have been out of the stock market by 2007 or latest 2008, which in retrospect was pretty well on the money. His thesis also suggests we won't get another bounce until we can get another "pop" of 45-55 year olds which is now many years away.
I don't think that this point of view explains everything, but I like it enough to keep it in the back of my mind as we work though all this. It's sort of the energy underlying economy.
Where Dent goes off the deep end, at least in the edition I read was this predicting this glorious boomer future where everyone is rolling in luxury goods. Wal-Mart was going to drop off the planet!! William-Sonoma for all!! Sure...
The thesis is this: economies are fed by their underlying populations, specifically, those who have achieved their highest earning power in the age 45-55ish range. You can back test highs in the DOW for the last 100 years or so and they correspond with population bubbles within this age range. From this point of view, the Roaring 20's and subsequent Great Depression in the US was fed by the massive influx of immigrants in 1890-1900, who reached their peak earning years in the 20's.
The boomers would have been one of the largest population bubbles the world as seen, and therefore, using this theory, it was very easy to predict both boom and bust. If you followed Dent's advise, you would have been out of the stock market by 2007 or latest 2008, which in retrospect was pretty well on the money. His thesis also suggests we won't get another bounce until we can get another "pop" of 45-55 year olds which is now many years away.
I don't think that this point of view explains everything, but I like it enough to keep it in the back of my mind as we work though all this. It's sort of the energy underlying economy.
Where Dent goes off the deep end, at least in the edition I read was this predicting this glorious boomer future where everyone is rolling in luxury goods. Wal-Mart was going to drop off the planet!! William-Sonoma for all!! Sure...
2009-09-08 18:32:03
Death of Novel = Death of Dollar
I've been reading about the death of the novel as long as I've been reading about the death of the dollar. In fact, I bet the correlation is about 0.9.
2009-09-08 20:07:33
Exhaustion
I'm not sure about anything, but the exhaustion signals via DeMark indicators across multiple time frames make me see a bottom as highly probable. But it's a probability, not a certainty. I wish I did know for sure, but the reality is I don't think anyone does, and the more certitude they present, the less I trust that point of view.
2009-09-08 20:12:47
In a (slight) defence of Harry Dent
You are right. There is more to those books than the covers. But Dent knew that would be the case and allowed the PR machines behind the books to present them as hyperbolic and prophetic tomes. I guess the argument is that, well, at least more people read them based on that presentation. Ok. But he knew what he was doing, and selling, and so I have no sympathy for him having put them up side-by-side. After all, that's exactly how they look at the bookstore.
2009-09-08 21:17:04
In a (slight) defence of Harry Dent
"But he knew what he was doing, and selling, and so I have no sympathy for him having put them up side-by-side. After all, that's exactly how they look at the bookstore. "
Actually, even if Dent was the World's Most Profound Thinker, I think it was totally worth putting them side by side because they *are* funny. Everyone does things worth a laugh or two.
I don't have much sympathy for him either, however. On one hand, I imagine it's hard to making a living off of premise so simple and reasonably accurate. 1-3 chapters in 1 book would have been sufficient to do a complete defense and investment strategy.
On the other hand, this is the author of the "great, glorious boomer" chapter. He could have come up with any kind of filler to pad his books. Instead, he decided to publish something completely unbelievable that amounted to "I'm a pretty awesome guy and part of an awesome generation" (Dent is a boomer.) He could have at least come up with either entertaining or credible filler - I don't think I ask that much. ;)
Actually, even if Dent was the World's Most Profound Thinker, I think it was totally worth putting them side by side because they *are* funny. Everyone does things worth a laugh or two.
I don't have much sympathy for him either, however. On one hand, I imagine it's hard to making a living off of premise so simple and reasonably accurate. 1-3 chapters in 1 book would have been sufficient to do a complete defense and investment strategy.
On the other hand, this is the author of the "great, glorious boomer" chapter. He could have come up with any kind of filler to pad his books. Instead, he decided to publish something completely unbelievable that amounted to "I'm a pretty awesome guy and part of an awesome generation" (Dent is a boomer.) He could have at least come up with either entertaining or credible filler - I don't think I ask that much. ;)
2009-09-08 22:48:10
Exhaustion
Kevin,
Thanks for the reply. What will it take to nullify the De Mark indicators? For me this is very similar to the housing bubble. I was absolutely 100% convinced it would blow wide open but not sure exactly when. I will always remember Scott Reamers MV post about the suddenly non-existent Real Estate Market, I think he used Miami as his source reported from there. Prices had yet to change but there were no transactions taking place. So I believe the math will always win out in the end. Very simple math, and it seems quite apparent to me that the US is basically bankrupt. I cant reconcile that view with any sustainable dollar rally that is not wedded to much higher interest rates. I could see a big rally like we just had but not a real bottom until the Fed is neutered, and that can only happen in my view via higher rates or a plunging dollar. I expect them to send us checks post haste.
Thanks for the reply. What will it take to nullify the De Mark indicators? For me this is very similar to the housing bubble. I was absolutely 100% convinced it would blow wide open but not sure exactly when. I will always remember Scott Reamers MV post about the suddenly non-existent Real Estate Market, I think he used Miami as his source reported from there. Prices had yet to change but there were no transactions taking place. So I believe the math will always win out in the end. Very simple math, and it seems quite apparent to me that the US is basically bankrupt. I cant reconcile that view with any sustainable dollar rally that is not wedded to much higher interest rates. I could see a big rally like we just had but not a real bottom until the Fed is neutered, and that can only happen in my view via higher rates or a plunging dollar. I expect them to send us checks post haste.
2009-09-08 23:20:51
Exhaustion
Stephen,
I for one, and bet many others, share your thoughts. It is perhaps the very root of the debate now going on with the dollar. In the end simple math does win, but I am certainly not smart enough to even know if it is as obvious as that... or what that equation looks like
Can it be the US really is bankrupt? What about all the other countries, except for usual suspects? Is it hope and pride for the US that makes me (want to) think otherwise? Is it as Kevin points out, contrarian in nature? Can it be that a communist country is "beating" us? It is bleak out there, but I can think of many other decades in american history that were bleaker? or maybe not? Conspiracy? nah....
Toddo thinking something is looming-- its does feel that way? or maybe with enough, or should I say, excessive thinking, one can always feel that way in any particular moment... Then again just because something is looming, does it mean its bad?
I for one, and bet many others, share your thoughts. It is perhaps the very root of the debate now going on with the dollar. In the end simple math does win, but I am certainly not smart enough to even know if it is as obvious as that... or what that equation looks like
Can it be the US really is bankrupt? What about all the other countries, except for usual suspects? Is it hope and pride for the US that makes me (want to) think otherwise? Is it as Kevin points out, contrarian in nature? Can it be that a communist country is "beating" us? It is bleak out there, but I can think of many other decades in american history that were bleaker? or maybe not? Conspiracy? nah....
Toddo thinking something is looming-- its does feel that way? or maybe with enough, or should I say, excessive thinking, one can always feel that way in any particular moment... Then again just because something is looming, does it mean its bad?
2009-09-09 11:51:10
Buy gold. That will preserve your money.
steve - http://scrabblecheat.com
steve - http://scrabblecheat.com
2009-09-09 13:01:34
Buy gold?
I agree it will keep or even dramatically increase it's value. But since the government is broke again what makes you think they won't confiscate it again like they did in '33 just 20 years after creating the Fed?
2009-09-09 13:04:21
lost sometimes
kevin, is there a primer for demark indicators etc for those of us who really don't speak the language yet?
2009-09-09 17:02:23
Longer media
Longer media will survive; witness hapless citizens such as myself coming to Minyanville and clicking through 3, 4, and 5 page articles with charts and heretofore unknown formulae to try and understand the mess our leaders in government and industry have gotten us into.
Slings and arrows of outrageous fortune indeed!
Slings and arrows of outrageous fortune indeed!
2009-09-10 08:24:11
Being contrarian is lonely
It seems to me that the logical conclusion - that the dollar will have its day again - is the outcome that 97% of traders have bet against. In that case buying any asset class e.g. gold, shares, silver whatever (but not USD Treasuries) is to step into the crowded elevator on the top floor. That's fine as long as you understand that you are running with the herd and are comfortable doing that.
2009-09-11 10:39:01
If everyone who is counseling buying gold on all these posts on all these sites was actually buying gold, the price would be $3000 an ounce.
Fine article.
Fine article.
2009-09-11 12:28:45
twitter ulysses yes yes yes
LOL.
Thanks, Amy.
My teenage daughter summed up a long discussion of health care/insurance with "There are a lot of rednecks. Too many people are mean and stupid and our education system helps keep them that way."
Thanks, Amy.
My teenage daughter summed up a long discussion of health care/insurance with "There are a lot of rednecks. Too many people are mean and stupid and our education system helps keep them that way."
2009-09-11 12:37:19
In a (slight) defence of Harry Dent
Yes, but the economic growth of a high working population is really the fact that they convert raw material resources and labors into activities, which are reflected in the potentials of the markets.
Africa has population booms all of the time, but usually related to someone else taking the resources that they dig out of the Earth and giving them lots of food, then walking away and leaving them to starve when they run out of things to dig up.
Pre-Reagan America was unique in that the resources AND the population boom were geographically located with those who benefited from the use of the resources. Post-Reagan is the Spanish Empire: taking resources from other places and forgetting how to use its own people to make things.
A population boom now would simply be increasing unemployment and competitive unrest.
The opportunity ladder has been kicked away from the wall that most thought they would climb.
Africa has population booms all of the time, but usually related to someone else taking the resources that they dig out of the Earth and giving them lots of food, then walking away and leaving them to starve when they run out of things to dig up.
Pre-Reagan America was unique in that the resources AND the population boom were geographically located with those who benefited from the use of the resources. Post-Reagan is the Spanish Empire: taking resources from other places and forgetting how to use its own people to make things.
A population boom now would simply be increasing unemployment and competitive unrest.
The opportunity ladder has been kicked away from the wall that most thought they would climb.
2009-09-11 14:17:23
Timing and contrary indicators
My favorite humble and profound statement (for us all) in your article is "I have my own far-ranging macro-economic thesis, but I also have the good sense not to try and charge anyone for it since, by definition, once you accept money for a point of view you're totally and absolutely committed to selling it... come hell or high water, and no matter whether it's right or wrong. "
That truism made me chuckle.
I would however like to add some caution for new readers who may take contrary indicators out of context as a precision timing tool. Mr. T certainly isn't helping in the short-term, and I wanted to be sure to note that Mr. Dent wrote "The Great Boom Ahead" in 1993 and we had one of the greatest bull markets in the 7 years following. I'm sure this is no surprise to you and is weighed in your overall perspective. But again, I don't want newer readers to conclude that Mr. Dent's books alone are a new contrary timing tool.
Finally, huge thank you for sharing your valuable perspective with Minyans.
Minyan Jeff
That truism made me chuckle.
I would however like to add some caution for new readers who may take contrary indicators out of context as a precision timing tool. Mr. T certainly isn't helping in the short-term, and I wanted to be sure to note that Mr. Dent wrote "The Great Boom Ahead" in 1993 and we had one of the greatest bull markets in the 7 years following. I'm sure this is no surprise to you and is weighed in your overall perspective. But again, I don't want newer readers to conclude that Mr. Dent's books alone are a new contrary timing tool.
Finally, huge thank you for sharing your valuable perspective with Minyans.
Minyan Jeff
2009-09-12 16:02:08
USd
all the real movement on the USD, you can find on my blog or web site.
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