It’s The Dot COM Dollar STUPID!

To paraphrase James Carville It’s The Dot COM Dollar STUPID!  Seven years of an Obama non-recovery is moving rapidly toward the next recession in 2016.

 

The Community Organizer is clueless.  It’s The Dot COM Dollar STUPID! When Obama showed his economic ignorance he really showed it.  Obama attacked Russia with economic sanctions by using the Dollar Reserve Currency as a political weapon. This has had devastating consequences across the global markets including US exports.

 

dollar dot com chart

 

The Dollar Reserve Currency is how global commerce is conducted. Most commodities including oil are traded in US Dollars.  For an emerging market to buy cheap oil or cheap ore, they must also finance the transaction in dollars. But with speculators buying dollars in response to global fear caused by Obama, dollars are being horded by speculators like George Soros. This has made it impossible for emerging markets to finance commodity purchases.

In the long history of global trade, the Dollar was never used as a political tool until Obama came along. Obama could not comprehend the notion that the US Dollar Reserve was something that was intended to be above politics. For Obama, nothing is above politics.

The net result is that the dollar has gone dot com to nosebleed levels and both US exports have gone to nil as have global purchases of commodities. The present talk of interest rate hikes will make this situation much worse and will likely trigger a bond market collapse as well as a stock market crash.

 

One does not unwind zero interest with a nosebleed reserve currency.

 

What has happened now is that the IMF and Australia have decided to accept the Chinese Yuan as a reserve currency. You may recall that China purchased $400 billion dollars in oil from Russia using the Yuan. Further Australian Ore now trades in the Yuan having saved the Australians 10% in transactions over using the US Dollar.

The greatest mistake is assuming that the US Dollar strength is good for Americans.  The dollar under the watchful eye of the Federal Reserve Bank since 1913 has lost 90% of its value. The dollar value continues to plunge but as the reserve dollar is plunging less slowly than many other currencies such as the Brazilian REAL. Thus, all currencies are losing buying power but the US rate of decline is slower than some currencies.

The only thing the politicizing of the Dollar Reserve has accomplished it to have the emerging markets teaming up against the Untied States.

 

There is not a single candidate running for the Presidency that has uttered a single coherent word about the economy or this bizarre Obama created malfunctioning dollar reserve currency.

 

Russian sanctions by Obama and Europe has seen GDP in all countries decline. With winter approaching Europe intends to stop sanctions. They should have done this when Putin took on ISIS our of pure respect. Putin has a plan to at least stabilize the middle east.

Part of the Obama plan was to use Saudi to damage Russian oil prices. In the process, Obama has aided and abetted Saudi in trying to destroy US Domestic oil production. This cheap oil is not in the interest of anyone. It is a weird Obama policy used to undermine US independence on Middle Eastern Oil.

 

Middle Eastern Oil is the currency of terrorism. Obama is facilitating terrorism with his sanctions against Russia and his push to destroy US domestic oil production.

 

The Federal Reserve under Janet Yellen is clueless about interest rates. Each day some novice economist spouts off about raising the interest rates. They have no understanding of the damage this will cause. Foreign currencies, US exports, will decline.  These political types simply don’t know how money works.

 

When the dollar is at dot com levels, pushing interest rates only makes it worse. Nobody can finance home mortgages when the dollar liquidity is gone. There is no lending. Look at the housing stocks earnings. They are all down. This is not a recovery.

 

There is nothing natural about a borrow and spend economy. Eventually it runs out of steam. Unless 85% of the GDP is directed to the private sector, there will be NO RECOVERY! At present 85% of the GDP is projected through government expansion and spending. It is a formula for disaster.

When the dollar reserve currency is high exports crash. It is terrible for commodities, and terrible for emerging markets. It is no time for the USA to raise interest rates. To raise interest rates, the dollar should be historically low.

The dollar reserve will be replaced. Large exports countries will adopt the Yuan.  Meanwhile, the Euro has been a disaster for European countries especially the Germans. I expect the EU will collapse.

 

Recently republicans raised the debt ceiling again. This will continue the borrow and spend disaster.

 

Since 2009 manufacturing has dropped form 25% of the economy to just 17% under Obama. These numbers show a trend toward making nothing. The highest paid jobs are manufacturing. Those have moved overseas.

The consumer is tapped out. They are worn out. Individual debt has soared. Retirement savings is nil. A recession is predicted for 2016. Sooner or later, the debt bill becomes due.  One cannot borrow and spend forever.

Retail sales this Christmas appear slow. Job numbers look seasonal. Corporate earnings are down. Funds lost $700 billion in the last quarter. The strain is being felt.

Without basic commodities the world becomes unstable.  People starve. Terrorism rises. It forms a vicious cycle of fear and more contraction. Yet candidates are pushing for increased interest rates without thought. This will end badly.

 

Unless the economic IQ increases in the oval office America is in trouble.

 

The Fed must be reigned in. With RINOs we now have two big spending parties. Both believe in massive government. Bush increased gov size by 30%. Obama followed by increasing gov size by 35% on top of that. This can’t be sustained.

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