The Dead Cat Has Bounced

The US dollar recently strengthened after a prolonged decline but was this a dead cat bounce as previously reported? The US dollar lost 1.09% yesterday. Although this is good news for our government since it reduced our national debt, this loss is achieved at the expense of your savings also being devalued. In another article, I outlined that the increase in the value of the dollar was due to the collapse of the Euro and people’s expectations across the world that our dollar is a safe haven. At that time, I recommended placing your money in the Swiss franc as the more prudent alternative.

The following report explains the dollar’s drop on the probability of our economic recovery faltering (the stimulus money ran out) and the strengthening of the Swiss franc.

Dollar Drops Versus Major Trade Partners on Speculation Recovery Faltering

The dollar fell for a second week against its major trading partners as reports showing growth cooled in the U.S. fueled speculation the recovery of the world’s biggest economy may be stagnating.

New Zealand’s currency approached a record high after China Investment Corp. said it will buy the nation’s bonds. The Swiss franc rose to its strongest against the euro and the dollar as speculation increased Greece may need to restructure its debt, increasing demand for safety. U.S. employment growth slowed this month, a report next week is forecast to show.

“We’ve had some disappointing data, and it has weighed on the dollar,” said Michael Woolfolk, senior currency strategist in New York at Bank of New York Mellon Corp., the world’s largest custodial bank, with more than $20 trillion in assets under administration. “There are so many fleas on that dog — no one necessarily wants to hold dollars for longer than they have to, and the Swiss franc is benefiting from that.”

More…

I want to offer another alternative: the economy never recovered. Printing fiat currency to prop up state budgets and “shovel ready projects” accomplished three goals:

  1. It postponed the true economic collapse necessary to rebuild our economy which will now be even more devastating.
  2. It devalued the dollar and what is left of our personal wealth.
  3. It redistributed our personal wealth through social programs supported by the various bailouts and stimulus programs. This will enable the Democrat Party to continue to buy votes using social engineering.

The price of gasoline has fallen to only $3.80 per gallon. The cost for food does not have to be reported: you already know the effects on your weekly grocery bill. The housing market is in free fall as pending home sales in April dropped 11.6% instead of the anticipated 1%. Do you see any reason why the US dollar is a safe investment?

David DeGerolamo

 

      
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