muses of the moment

October 13, 2009

The Fed wants the US Dollar Dead

Here is more information you will not see from the F-TV talking heads:

Click here for the whole article from Zero Hedge. LOVE this site. This is the information you need to invest wisely…not CNBC.

A clip:

By purchasing $40 billion in SDRs virtually overnight, what the Fed has done is to increase the value of the entire basket pro-rata, while in the process reducing the actual value of the dollar (which is a weighted constituent of the SDR basket). This was an operation to reduce the dollar’s value: pure and simple. In many ways it explains why the DXY has continued its straight one way decline since the beginning of September, when many pundits assumed the market was finally going to tank on profit taking after Labor day. By performing this dollar adverse transaction, the Fed sent a loud and clear signal what the Fed was going to do going forward vis-a-vis the i) dollar and ii) its derivative, the stock market.

And what is worse, this is not a roundabout or circuitous way of devaluing the dollar: this is head on intervention. It is one thing to print trillions of MBS and Agencies and to monetize Treasuries, where one could say Tim Geithner’s claim that the U.S. is for a strong dollar, and the dollar is only weak as a function of supporting housing prices. That could potentially fly as an explanation. However, when the Fed is actively and purposefully destroying the dollar’s worth via transactions such as material SDR purchases, then it truly demonstrates Geithner’s statement as an bold faced lie to the American public. When will Mr. Geithner be finally taken to task for his repeated fabrications of reality and intent?

The Government believes they can control this financial crisis. They can, until they can’t. (In the mist of their trying, they will kill the dollar and any investment in dollars.) Be prepared as there will be no warning when they lose control. Could be tomorrow, could be 7 years from now. Result….hyperinflationary depression.

The government understands that their debt to China (and the world) and their debt to you (in the form of future social security payments and Medicare) will be CHEAPER if they devalue the dollar. Your social security check will be the same, but worthless to buy anything. So, technically, the government will not “break their promises”.

First step, devalue the dollar, second step change the inflation formula (so they don’t have to raise SS payments in line with real inflation). The government is doing both these things. This is happening now, prepare yourself and your family now. Start educating yourself about investments that will protect your dollar’s purchasing power; physical gold and silver are a good start.

The government is in a position where they gain nothing by a strong dollar, they will continue to print money. Watch what they do, not what they say.

Side musing: The dollar index will have to rise above .86 to break the trend downward (going on since 2001). This morning (10-13-09) it fell below .758 (in Asian trading), up to .761 in early market trading.

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