Tuesday, December 28, 2010

Which Currencie Will Fail First?

Yes that is a dramatic statement, but I do believe that there will be a point in time when FIAT is seen for what it really is:  a failure.  As for which fails first, my guess is as good as any, but I do have some thoughts on the question.  First, which are the most oversold/overbought?  How does debt correspond?  Does this question, which currencie will fail first, even matter?

If one is looking to make money short term then it will matter which currencies fail first.  What ever the order is could play a role in equity positions and bonds.  I will discuss each of these points with the individual currencies.

Let us begin with the Yen.  I believe the Yen is the most overbought one.  That would mean it is the strongest currencie right now.  For that reason I think it could sell off.  The Japanese debt is huge and they have a weak Yen policy.  Shirakawa has the Japanese PPT buying ETFs on the open market for lord7s sake.  If there is not a more desperate move than that I don't know.  I think the Yen will not strengthen more than where it is now, vs the dollar, and could move to 90 in only a month if the conditions are right.

The Pound Sterling is overbought, but not as much as the Yen.  I think that because at least the Brits are doing austerity measures (not that I agree with austerity), which the Japanese are not.  I think the Pound could continue to trade around where it is now, but it could go to $1.40 vs the dollar.

The Euro is a mystery to me.  The Euro Zone is not supposed to print money out of proportion with GDP, but they do.  They have a massive debt, but they are slowly instituting austerity.  There currencie is weak, but compared to the dollar?  I think in the end the Euro will win out only because geographically Europe is well situated to survive peak oil.  I think that that reason alone will keep the currencie afloat.

The dollar is the world reserve currencie and if it fails all fails, but I think that that is a distinct possibility.  What better way to end the Neo Keynsian system than to flush the Chief asset down.  The US has done no austerity and continues to spend trillions on worthless bank propositions by the Federal Reserve.

I think the dollar has the bullseye on its back because what better way to make monie than to take down the giant?  Ask yourself, which trade would make the most monie?  The dollar is the reigning champ and it would be a heavyweight title fight.  I think the dollar is past its prime.  I think it goes first, and takes the system with it.

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