Is the US$ Going to Crash?

 

 

The Entry Points

 

Trader Scott

 

There are a lot of folks out there who believe there is tremendous pressure on the US$. Agreed. However, most of those folks believe the pressure is to the downside. I believe the opposite, the pressure is to the upside, am still long the $, bullish, and have added on a bit. There are plenty of logical reasons to assume the US$ is heading much lower. Agreed. But it’s all about the timing of it. And the dangerous outcome is not a “crashing” US$, but it’s a surging US$. Do you remember all of the hysteria back in 2008 about the “crash” in the US$, and it still continues today. There were/are many scam artists who sucked people into buying gold, or any “tangible assets which will benefit from the crash in the USD”. But a funny thing happened along the way. The $ did not remotely crash, yet gold, and all tangibles, had a stellar run into Spring 2011 thru to 2012 – stellar – and without a crash in the $. Another market “theory” shot down. Yet we couldn’t get rid of these scam artists, as they are still around scamming away with another completely incompetent sales pitch. Their US$ crash pitch was a bust, but the selloff in the $ since 1/3/17 has given the scammers new hope.

It’s tough to see a situation where the trillions outstanding in global US$ based debt can have any effect but to push the US$ higher, possibly much higher – pressure. And we can combine that with the disaster sitting in the European and Japanese banking systems, which is in great part thanks to the insanity of negative interest rates. What in the world is going to happen to the massive hedge funds, oops excuse me, central banks, when all of the negative yields which they are loading up on go to positive yields. And then keep going to even more positive and positiv(er) rates over the years (meaning lower and lower prices). Who’s going to bail them out? And much of the debt which they have been loading up on is low credit quality to boot.

Back in the glory days with the “US$ crash”, in 2008 and beyond, the mantra was QE/money printing would destroy the value of the $, and gold would soar, of course. Well gold did soar, almost tripling, but the $ did not crash, and it is not going to crash. Money printing did not cause inflation, nor will it. The mechanics of QE was never about causing hyper-inflation. It’s been about moving “money” around, and much of it has been sitting in bank’s reserves, not getting into the economy, but certainly some went into the financial (paper) markets. The Fed grew its balance sheet from 900 billion to 4.5 trillion, while the bank’s grew their reserves from 800 billion to 2.5 trillion. There will be another post about these issues along with the QE by the other central banks, and how exports fit into this. But we need some perspective here about the Fed’s balance sheet. The total FX trading per day is about 5 trillion, while the Fed’s balance sheet is 4.5 trillion. And lastly, looking at the long term US$ chart below, we can see the 2 major tops, and it was the soaring $ which caused its own demise. History will repeat.

 



Missing Podcast?

If you see an error with an archived podcast or know that an episode of our show is missing, please press the button below to send us a message so we can look into it.

Enter your name and email if you want to be notified when this podcast is fixed:

'Trader Scott’s Market Blog – Is the US$ Going to Crash? – May 24, 2017' have 2 comments

  1. May 26, 2017 @ 9:29 pm Lee

    The USD remains in a secular bear market in my view, based on the declining 200 month MA. The USD chart since 1980 shows the evidence…..lower highs followed by lower lows. Will it hold above the lows from 2008? And will it be able to eventually exceed the previous highs around 120? It’s a huge range. The 40 day MA crossing the 200 day MA is a reliable indicator on the USD…..100 % bearish now.

    Reply

    • May 27, 2017 @ 2:38 pm traderscott

      What are you talking about Lee? The USD exploded into the 1985 highs (165). I’ve been long the $ for 6 years. Agreed it’s a huge range. I don’t use MAs, so I’ll trust you on that one. The end of the $ is coming, it’s just timing, you may be totally correct. We’ll find out.

      Reply


Would you like to share your thoughts?

Your email address will not be published.

©Copyright One Radio Network 2014 • All rights reserved. Site built by RedLotus AustinThe information on this website and talk shows is solely for informational and entertainment purposes. IT IS NOT INTENDED TO PROVIDE MEDICAL ADVICE. Neither the Editors, producers of One Radio Network, Patrick Timpone, their guests or web masters take responsibility for any possible consequences from any treatment, procedure, exercise, dietary modification, action or application of medication which results from reading or following the information contained on this website in written or audio form, live or podcasts. The publication of this information does not constitute the practice of medicine, and this information does not replace the advice of your physician or other health care provider. Before undertaking any course of treatment, the reader must seek the advice of their physician or other health care provider and take total responsibility for his or her actions at all times. Patrick Joseph of the family of Timpone, a man...All rights reserved, without recourse.