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Yes, I agree, Martin.
Interest rates seem to rule the forex market. Capital moves from one
sinking currency to the next.
If the US Feds devalue the US$ by printing more greenbacks, then other
currencies are often forced to do the same so that their exports don't
become too expensive for the rest of the world.
But my point is that the US$ (and related currencies) has been falling
in *real terms* (purchasing power) for a while now - a massive 53%
since Jan 1st 1999.
Printing money (real name: counterfeiting) is a form of hidden tax, an
unethical way of transferring wealth (real name: stealing) from the
masses to the few in power.
jose '-)
http://www.metastocktools.com/#USindex
--- In equismetastock@xxxxxxxxxxxxxxx, "Martin Blain" <marty@xxx>
wrote:
>
> Jose
> Just a side note. The US dollar will probably start to fall in
> earnest when the interest rates plateau or fall
> Martin Blain
> http://www.saddleworx.com
> http://www.martinblain.com
>
>
>
--- In equismetastock@xxxxxxxxxxxxxxx, Alexander Atreides
<alexatreides@xxx> wrote:
>
> Jose,
>
> This is indeed a good PROXY to measure strength in
> economy and "real" wealth.
>
> Truth is goverments have done everything they could so
> at to cover the real picture. The name of the game is:
> Debt. This is the currency for the new century. Not
> having debt means you cannot exist. And yes, I
> completely agree with you that currencies are fiat.
> All. Every sunrise, an invisible "machine" adds wealth
> to the capital centers, in the form of interest. To me
> it looks like this "virtual" wealth has surpassed in
> magnitude the true wealth of the planet. And that is a
> "crital condition" as chaos-oriented scolars would put
> it.
>
> Your effort is genuinely clever, although
> statistitians may argue that such analysis would
> further need to be refined with some "correlation" and
> "autocorrelation" filters. And even then, it would
> just be a statistical model, open to interpretation
> and propability.
>
> Thank for your idea.
>
> AlexAtreides
>
> P.S.: I trade debt for a living. We call it "fixed
> income" (sic). I am certified asset manager.
>
>
> --- Jose Silva <josesilva22@xxx> wrote:
>
> So, the markets are in a raging bull mode, and stories abound of
> +10% profits for this year. Time to put things into some
> perspective.
>
> US$ purchasing power, as measured against a basket of commodities:
>
> since Jan 1st 2006: -11.5% (!)
> since Jan 1st 2000: -49.2%
> annualized: -7.9%pa
>
>
> From:
> http://www.metastocktools.com/#USindex
>
> The US dollar is universally considered an absolute yardstick - most
> of the world's wealth is measured against it.
>
> Yet, the mighty US$ is a fiat currency, a paper-based measurement of
> wealth with nothing but good faith to back its perceived value.
> The US$ is only worth as much as any other promissory note, and its
> worth is being continually diluted and devalued as the US Federal
> Reserve Bank continues to print more notes at an alarmingly
> accelerating pace.
>
> The true value of the US$ cannot be measured against other
> currencies, as these are also likely to originate from overworked
> government printing presses. A true and objective measurement of the
> US$'s real value would be its purchasing power at any given time.
>
> The US$ value index above is basically a measurement of the
> greenback's (decreasing) purchasing power. The index measures the
> US$'s rate of change (RoC) against a small but essential basket of
> commodities:
>
> Gold: putting aside temporary fluctuations, it is as close to an
> absolute and constant measurement of wealth as can be found.
> An ounce of gold took as many working hours to purchase 80 years
> ago, as it does today with an average wage.
>
> Oil: currently a most essential source of energy - civilization as
> we know it would cease to exist without it.
>
> Wheat: one of the major sources of food for an increasingly hungry
> world.
>
> US$ value index: (RoC(US$/Gold)+RoC(US$/Oil)+RoC(US$/Wheat))/3
>
>
>
> So, what does the US$ value index mean in real terms?
>
> * Since the start of year 2000, the US$'s purchasing power has
> halved. $1,000 saved in Jan 2000, now buys around $500 worth
> of goods.
>
> * US's real inflation is being massively under-reported, and in
> reality is closer to 8%pa.
>
> * The US stock market's true worth is much lower than generally
> perceived by the public.
>
> The bottom line is that storing one's wealth in US$ (or any other
> paper currency) is a recipe for diminishing returns.
>
> Keep an eye on the US$ value index, for a true measure of the
> world's default currency and all that is measured against it.
>
>
> jose '-)
> http://www.metastocktools.com/#USindex
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