US Dollar is losing value...and petrodollar status (Part 1)
economics·@worldfinances·
0.000 HBDUS Dollar is losing value...and petrodollar status (Part 1)
Inflation is going to be the theme of 2018 and how do we know that this is the case? Well let's look at what happened to the dollar last year. The US dollar got melted down last year and this trajectory has been going on for decades. It's just getting progressively worse and it's going to continue through this year.  source: [yahoofinance](https://finance.yahoo.com/quote/UUP?ltr=1) The President Trump wants that weak dollar, as he wants to keep the dollar low in relation to other currencies. Why? Trump has been talking about wealth since pretty much the beginning, that United States can expect their economy to improve and the stock market to continue going higher. Well he certainly got that wish part of the action. Part of that is the dollar being weaker and continuing its downfall # the weaker dollar is stock market positive so you can be pretty assured that it is going to be the theme for 2018. The dollar is not going to get stronger. Here we are going to see commodity prices rise. Everything is going to inflate this year especially the stock market it's got nowhere to go but higher - for a multitude of reasons. There's other reasons why we're going to get inflation here that I don't think many people talk about here so we're gonna get all this repatriation of cash that we've been hearing about. As the dollar gets lower money velocity, starts to kick up on all of these extra trillions of dollars in digital form. https://fred.stlouisfed.org/graph/fredgraph.png?g=fYRd __Money velocity of US Dollar 1958-2017__ Source: [FRED Economic data](https://fred.stlouisfed.org/series/M2V) If anyone listening to the Federal Reserve, they are "concerned" about stock market valuations, being a "little bit" high. They're also concerned about the yield curve that it's flattening out that is the spread between the yields in the short end of the curve, and the long end. The Fed is in a very very bad spot if they were really concerned about stock market valuations. https://qzprod.files.wordpress.com/2015/03/fed.jpg?quality=80&strip=all&w=3200 source: [Federal Reserve](https://qzprod.files.wordpress.com/2015/03/fed.jpg?quality=80&strip=all&w=3200 ) If they were really concerned about the yield curve flattening out ,well what would they have to do is meaningfully raise rates not just to the curve end here. 25 basis points to the short end of the curve is doing nothing. To the rest of the curve however, if they were serious what would they do.... they would start normalizing their grossly abnormal balance sheet faster. But they won't do that because it would normalize the U curve, but it would also put pressure on the stock market and they cannot allow that to happen. _The market again is relying on this weaker dollar to move higher. Meanwhile they also say though USA economy is going to grow in recovery._ ___Then why are they not raising rates??___ # The markets right now are being used as a political tool People are distracted by what's going on. The Federal Reserve is trying to create the wealth effect by a bubble in housing, by a bubble in the stock market, and getting people around to spend cash, they cannot grow out of the hole. Debt bubble and deficits are going to get worse. Distortions are getting worse, valuations are getting more distorted than they already are. <center></center> <center>https://i.imgur.com/eMSgLG3.gif</center>