Posted on 07/14/2022 7:14:30 AM PDT by Browns Ultra Fan
The US Dollar keeps strengthening as inflation skyrockets. Good news?
Bear in mind that a strong dollar is a two-edged sword. The US Dollar Index has risen 16% year-over-year, presenting a big hurdle for US firms with business overseas.
That strength of the greenback will rise until the Fed makes a dovish policy pivot.
And that pivot is forecast to occur at the Feb ’23 FOMC meeting.
But will The Fed pivot?
The Biden Cocktail.
(Excerpt) Read more at confoundedinterest.net ...
“That strength of the greenback will rise until the Fed makes a dovish policy pivot.”
What is the current policy, and what is the definition of pivot in this context?
Does the Fed really have a policy or are they just throwing mud on the wall?
I predict as long as the Democrats are in power, they will mismanage this until they produce a depression, and then keep on mismanaging it...
I’m starting to think that the Biden admin has a scorched earth policy on the US economy. The data is just so completely rotten, maybe they are angling to just make it so bad that the public gets numb. But the Fed is going to have to hammer things a LOT more than they already have.
The Fed won’t pivot until something breaks badly. Its become their norm in both booms and busts - carry on until an obvious crisis occurs.
Other countries share similar monetary and fiscal policies and resultant problems. These include years of near 0% interest rates and massive (trillions) of short-term debt financed at near 0% interest rates. Short-term being 3 years or less. Concurrently, central banks around the world are increasing interest rates to reduce inflation. This is a huge global problem. The major nations of the world, including the United States will have to refinance huge amounts of debt at higher interest rates. The interest payments on the debt will force countries to cut significant parts of their budgets or print money. Just imagine what that means to Europeans, or government dependent people in American cities.
We are only at the beginning of major economic problems.
The rest of the world still sees the US Dollar as the only hedge against far worse managed economies and far weaker currencies. I can still show dollar bills on any third world street and get outrageous offers for currency trades.
And the rich still sink their money into the US stock market or bond market because even in a bad market, the US dollar will have value, and the US stock market will have value. The Shanghei and Shenzen are pipe dreams being supported by Chinese fake statistics. The MOEX is “literally” a joke. Does anybody really invest in the MILA, BMV or COLCAP?
We will be the last to go, but when we go, there will be the devil to pay.
While there are obvious negatives to a strong dollar what does it say about the position of our country relative to the rest of the world with an impeding global recession on the horizon?
The Democrats’ primary concern seems to be that high inflation will destroy the verisimilitude of their massive fraud campaign. Even with COVID and Mean Tweets, too many people didn’t buy their 2020 act - with an economic disaster unfolding, even the thickest of commentators are going to notice something amiss if the Democrats still manage to sweep all of the major races in November.
Surely, the FED has figured out by now that the Biden administration is actively working against them. Now, there is talk of a 100 basis points increase in the federal funds rate in a couple weeks. The dream of a soft landing is slipping away as they watch the White House continue to pursue a course that feeds inflation. Restricting domestic oil exploration, reviving Build Back Better, and sending more money and weapons to Ukraine to prolong the war are all making the problem worse.
I’m not sure I agree with that.
I think the Fed deals with the reality they find, while thinking they are the masters of the universe. They have these hammers, interest rates and system liquidity, and try to use them to effect their goals. I don’t think they have much of a political opinion. Plus, they are always thinking 6 months, a year out. If Janet Yellen drives by a gas station and sees a 25 cent gas increase, I don’t think turns around back to the Fed bldg and starts cranking the phones. She probably thinks “hey this is good for my oil stocks, so everybody must be making money”. Just as likely. She HAS accumulated a substantial stock portfolio in the interim period when she was out of office.
I just think the market is terrified of the notion that the Fed is gonna have to raise and raise rates (because it’s all they know) and will trash the economy via overshoot. They have done this several times in the past.
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