Wednesday, January 12, 2011

Dollar the cliff Jumper

If the dollar was good at anything it is the fact that it can move down abruptly and cliff back up to the point it was.  It is a kin to a cliff diver who jumps and then climbs a trail to jump again.  The dollar has performed from many different nooks on the cliff, jumping from 89 to 79 this summer into fall.  There was also its descent during '09, spring, summer, and fall when the dollar made the same feat.  Now the dollar has made smaller jumps, choosing to stay on the smaller part of the cliff. 

There is one spot that has called the dollars name, but the dollar has never tried the jump before.  It is to the DXY 70.   It looks to be a dangerous jump.  The landing is rocky, the water may be shallow.  But a group led by Bernanke have goaded the dollar into trying the trick.  They have pointed and said, we want you to jump to the water.  The move will take the dollar from DXY 80 to the low 70's.  If the dollar does not make the jump perfect, it may not survive.

This may not be a choice that the dollar has though.  Geithner wants the Yuan to begin to do tricks and if that happens the dollar may be forced to jump.  Basically if Geithner gets his way, the Yuan will be a rock tied to the dollar and it will be pushed off into the sea below.  The dollar's day looks to be numbered. 

Paper was a fragile choice to embody the dollar's Frankenstein nature.  The Central Bankers were looking for the easiest way to get the monster off of the table, and paper was cheaper than gold.  It is funny that it comes down to the bankers being cheapskates, but that is the truth.  The dollar plan was laid bare so to transfer wealth at the lowest cost to the banks.  It was a win win situation.  Of course the situation is over and it has become a problem.  The only answer to the problem is gold.  It is obvious, in part because look there the banks have all of the gold-supposedly,  But also it is a fact that gold is monie.  Soon the monster will fail.  Will it be rewired?  If it were, at what cost?  Hopefully people will stand up and act to make the choice themselves so the decision, once again, is not decided for them.

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