Bob Chapman, who issued a reconstructed M3 estimate to the 100,000 subscribers to his newsletter, "The International Forecaster", agrees.
Posted on 12/13/2006 4:36:21 AM PST by Man50D
Two analysts who have reconstructed money supply data after the Fed stopped publishing it argue a coming dollar collapse will set the stage for creating the amero as a North American currency to replace the dollar. The reconstructed M3 data – the broadest measure of money – published on econometrician Gary Kuever's website, NowAndFutures.com, shows M3 increased at a rate of 11 percent in May, compared to 9 percent when the Federal Reserve quit publishing M3 data earlier this year.
Asked why the Fed decided to stop publishing M3 data, Kuever told WND, "The Fed probably wants to hide how much liquidity is being pumped into the market, and I expect the trend to keep pumping liquidity into the market will continue, especially since the economy is slowing down."
Why is this important?
"The trend line in my M3-plus-debt chart is staggering," Kuever said. "There has been a straight, long-term trend line of M3-plus-credit increasing since 2000. Long-term, we are creating inflation and the dollar has lost almost 98 percent of its value in the past 100 years."
Kuever, a retired investor, is concerned that with growing budget and trade deficits "the dollar could collapse."
"Especially if the Fed cannot increase rates, because we have already entered a recession," he said.
Bob Chapman, who issued a reconstructed M3 estimate to the 100,000 subscribers to his newsletter, "The International Forecaster", agrees.
"The world is awash in money and credit," Chapman told WND. "My numbers show M3 increasing at about a 10-percent rate right now."
Chapman believes the U.S. economy entered a recession in February. In his newsletter of Dec. 9 he predicted the Fed would hold interest rates at 5.25 percent.
"The Fed is in a very tough spot here," Chapman wrote, "If they raise rates, the real estate market will collapse, and if they lower rates, the dollar will collapse."
Meeting yesterday, the Federal Reserve Open Market Committee voted, as Chapman had predicted, to hold the overnight lending rates between banks steady at 5.25 percent. This was the fourth straight meeting the Fed had voted not to change rates. In its rate announcement, the Fed affirmed the economy had slowed.
Almost immediately after the announcement of the Fed's decision, the dollar weakened to a new 20-month low against the euro, with currency markets reportedly pricing in the expectation the Fed will be forced to lower rates next year to bolster the economy. Following the announcement by the Fed, the U.S. Dollar Index, or USDX, also dropped, with the dollar going below 83.
A dollar collapse is imminent, Chapman declared.
"Technicians studying the USDX think there is a support level for the dollar at 75, but I don't think so."
How low could the dollar go?
"If the dollar breaks through 78.33 on the USDX," Chapman answered, "my guess is the dollar will go through a 35-percent correction, which would put it at 55."
"The key in how low the dollar goes is the interest rates," Chapman told WND. "In January, the Fed is going to have to make a decision which way to go. If Fed rates go up, the dollar will hold in the 78.33 range, but the stock market and the economy will tank. If next year the Fed lowers rates to keep the economy from crashing, the bottom will fall out of the dollar, and I see it going as low as 55. Once the dollar hits bottom, it will take the stock market and the economy right with it anyway. The Fed is in a box they can't get out of."
As WND reported earlier this week, in an unusual move, the Bush administration is sending virtually the entire economic "A-team" to visit China for a "strategic economic dialogue" in Beijing Thursday and Friday. Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke are leading the delegation, along with five other cabinet-level officials, including Secretary of Commerce Carlos Gutierrez. Also in the delegation will be Labor Secretary Elaine Chao, Health and Human Services Secretary Mike Leavitt, Energy Secretary Sam Bodman, and U.S. Trade Representative Susan Schwab.
But Chapman doubts the trip will help the Fed to engineer a slow dollar slide.
"The Chinese are going to do what the Chinese want to do, not what we want them to do," he said. "I believe the Chinese are going to send Treasury Secretary Paulson and Fed Chairman Bernanke home packing, with little or nothing to show for the trip."
How severe will the coming dollar collapse be?
"People in the U.S. are going to be hit hard," Chapman warned. "In the severe recession we are entering now, Bush will argue that we have to form a North American Union to compete with the Euro."
"Creating the amero," Chapman explained, "will be presented to the American public as the administration's solution for dollar recovery. In the process of creating the amero, the Bush administration just abandons the dollar."
Beware of the Stonecutters...............
More scare tactics from the media. The dollar might go down, as it has before, but it's not going to "collapse."
a low dollar should not be viewed as a negative. It insulates the economy from overseas export, making them more expensive, thus less competitive. It kicks start local industries. It also makes US exports overseas alot more competitive
Unless his idea of a recession is something other than the classic we weren't close this year even if you chain everything to the value of the dollar six years ago. What a loon.
Having said that it's no secret that the FMOC always raises rates too much and I've never seen an external event that could override their actions.
oops. sorry, wrong thread.
How did this kooky screed get in breaking news?
wacadoo conjecture isn't breaking news.
It causes inefficient allocation of capital and insulates American industry to foreign competition so that with the distorted market signals the distortion gets worse and American industry in the long run gets less competitive because it does not work so hard to increase efficiency, reduce expenses, etc. Products become more expensive to consumers and the standard of living is continually lower than it would be. The misallocation of capital means that industry is less efficient and able to hire fewer employees. A guaranteed stable currency in a freemarket system is the guarantee of maximum efficiency and maximum employment and the greatest advance in living standards.
And the amero would be like the Euro?
http://www.freerepublic.com/focus/f-news/1752714/posts
No thanks, I'll take my dollars...
This thesis is simply a sample of the nonsense awaiting us in 2007 and beyond. The emerging spirtituality of Global-Diversity is overwelming nationalism. Thus the prophetic MSM will refer to the US$ in the past tense.
Kum Bay YAAAH
Greenspan (in typical FED-speak) has been telegraphing a continued fall in the dollar because of our massive deficits. It's time to diversify investments into non-dollar denominated assets to hedge against what is sure to be a massive plunge in the USD. Got gold?
Greenspan is now Mr Anrea Mitchell. Gold is good for capping teeth and other bodily festoons.
This is mind numbingly stupid.
Current M3 put together by the FedReserve is still available to academics.
If this guy Corsi is interviewing doesn't know this, he has no business doing interviews on his amateur hobbyist site.
Corsi looks like a complete kook!
"It causes inefficient allocation of capital and insulates American industry to foreign competition"
The most inefficient allocation of capital is when it's allocated overseas instead of at home. And that's been happening with a vengeance the last few years.
"A guaranteed stable currency in a freemarket system is the guarantee of maximum efficiency and maximum employment and the greatest advance in living standards."
Absolutely. Unfortunately we don't have free trade with companies in Asia. It's a one-way street.
Free trade can be a one way street and it will ultimately be to the benefit of the freetrader and to the loss of the hampered trader as the distortions in the hampered economy pile misallocation on misallocation. The answer to someone banging his head on the floor is not to cut your toes off.
How did this news leak? Heads will roll at NAU Headquarters.
Huh? The U.S. is the premier destination for capital investment in the world.
I've seen that information posted a couple times already, usually with the implication that it's somehow "not right," or "unfair." What do you have against employees of Goldman Sachs making money?
I'm pissed off because I'm not a Goldman Sachs employee, of course...
For what it's worth [pun intended], I know some former employees of big-name investment firms. They certainly raked it in, but I wouldn't have wanted their jobs even if they offered them to me. I prefer to have a life.
There are probably some who like the intense, energy-draining work; others probably figure that if they just sacrifice a few years of their lives, they'll be on Easy Street thereafter. I wonder how often that dream comes true, though...
It looks fine on paper, and works for some. Others end up twice-divorced, recovering substance abusers (with money in the bank).
Corsi is like Willie, addicted to gloom.
Granted it might steer some to buy his book(s), but from a professor, this conduct is reprehensible.
Ping
"My numbers show M3 increasing at about a 10-percent rate right now."
Ah, The Real Inflation Rate!
And the fiscal gap over 65 trillion dollars.
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