Loading ...For KenS And Dollar Bulls Generally
The dollar is king. It’s the worlds reserve currency. I’m not going to pretend I know the reasons for certain, but I can read what the charts are telling us. Over 22 trillion debt, a cornered FED, a president who is unpredictable, and the rise of Asia are all factors. There are many others. I don’t much care. The charts makes it blindingly obvious what is most likely to happen next (not 100% guaranteed – but most likely). A final dollar surge IS possible, but if it were to happen, I believe it would be short lived. Here’s the USD and GBP/USD charts…
I would argue from a fundamental perspective that as the currencies around the world start collapsing, the dollar will get stronger. Cycles are fractal in nature and if you don’t understand the next larger cycle, you will misread the cycle you currently are studying. Northstar – the cycle you are looking at is about what – 16 years or so in length? Do you believe cycles are fractal in nature? If so, what is the time frame of the next larger cycle? 50 years? 75 years? What is that cycle telling you? Maybe the four cycles you see in your example above are the bottom of a much larger cycle that will now head upwards as we enter the post bubble contraction. Food for thought. I would suggest you don’t put all your eggs in one basket that the dollar is headed lower. Remember – “If its’s obvious, it is obviously wrong.” Thanks for all your posts, and I certainly wish you good luck.
Thanks for your thoughts Ken, and I certainly agree that not putting all your eggs in one basket is a good idea, A fractal is a pattern which is embedded within a much larger pattern, but apart from the scale, both patterns are the same. The trouble here is that we can’t go back too far because the monetary system was very different. I’m restricting my analysis to the modern (un-backed) FIAT era. After all, it’s what happens to our paper money from this point forwards that matters. You can look at the relevant, recent past (back to the 1970’s) to make inferences. I agree that if our monetary system changes, then the rules change. Until then, we can apply similar techniques going forwards. The question for me, is whether the Dollar survives it’s next cyclical low. I think it might. I think it might take until it’s next cycle low for a new ‘world reserve currency’ or a significantly different system to emerge. Much depends on Russia, China, Iran etc and how world trade develops in the next decade. I still maintain that at some point faith in the dollar will falter under the weight of debts and liabilities. I’m not saying that’s not the case with other currencies – it is. It’s just that everyone will be much more focussed on Dollar frailties, putting it in the spotlight and adding to it’s woes.
Agreed, but for now, it is the least stinky fish in the pile.
Well to be more accurate it’s the 10th most stinky fish in a list of over 100. That puts our world reserve currency in the top 10% of most stinky fish on the planet. The vast majority are a lot less stinky.