Like a script out of a Rocky movie the Dollar is still the undisputed heavyweight champion of the world's currency. After being knocked down by the Yen ad the Rubble some time ago the Dollar has comeback and regained it's supremacy. A reversal of fortunes as the tables have turned with Russia's economic troubles piling up along with the current conditions in Japan and China have given the Dollar one last championship belt. The timing of this latest report about the dollars comeback considering the delicate condition the overall US economy actually should signal that their ought to be concerning questions about the validity of all these reports on how robust our economy really is. Or is it really? Some economists insist another financial bubble is poised to burst while other dismiss it. But, what should be reported about our current economic and financial condition is so often glossed over. On one hand we have had wage stagnation for years now. And, with inflation rising faster than a speeding bullet those wages have actually shrunk. Now, the fact of the matter there are still mass layoffs occurring brings more attention to the fact that the United States economic outlook is a far cry from what is really being reported. Still the media keeps insisting that we fare much better economically than our neighbors across the Atlantic.
For several years now that income disparity gap has only gotten wider brings one to conclude that the 1% has and continues to reap the dividends of today's economic quandary. No surprise there, but, what should be noted is the fact that a well orchestrated coordinated posturing of economic conditions for the 1% have restored the dollar as the worlds first currency. In restoring the supremacy of the Dollar amid the current financial state of the United States has only delayed that inevitable burst of anther economic bubble. To this day the fictitious reports that the economy is growing and gaining momentum is a slight of hand by the media and our politicians to make the public believe all is well and good. But, contrary to what is being reported and when we take a closer look at what is really underneath this facade of reported economic prosperity there remains many negative financial indicators we haven't seen since the Lehman Brothers bankruptcy in 2008. All these indicators are like glaring flashing red lights that the Dollar's reign will come crashing down along with an economic avalanche.
When we take a look at the low level of the inventory-to-sales ratio, a key measure of future corporate profits and retail sales they have been falling drastically. We also learned the Atlanta Fed lowered its real-time first quarter GDP estimate to a moribund 0.6%, another drastic drop. Through in unemployment numbers of over 300,000 loss jobs for just the month of February is another nail in our economic coffin. Lumber sales, another important leading economic indicator, plunged. Meanwhile in the technology sector Intel Corp lowered its revenue estimate for the first quarter by over $1 billion on plunging PC sales. On Wall Street there have been ominous signs that signal a potential volatile swing in the market. Just last week the stock market saw its largest rally in months, with the S&P 500 jumping by 1.24%. But, by contrast to years past rallies this jump was very weak with only 92 million shares traded. Another fact that has never been emphasized by our main stream media is the fact that the ups in volume trade for quite some time have actually been declining. For the first time since the Internet Bubble of 2000 the direction of the markets has actually been decidedly downward. Could it be that the consistent stream of negative economic reality is finally starting to get through to investors? One has to wonder.
Now, we come to the American Dollar, the Rocky of American currency, at least for the moment. The Dollar has been the primary force behind the market. And, there are two sides to the quandary of the US dollar. The media is reporting that the dollar is again the strength behind the markets rise. But, what they don't tell is that the history of the market since 2000 has been one of a consistent downward trend. One of the key factors that is not being reported is the fact gold reserves have been decreasing here in the United States while Russia, China and Japan have been accumulating large quantities of Gold Bullion. All this in hopes to restore the credibility of their currency and break away from the choke hold over their economic troubles. In reality to the reported news of the strength and resurgence of the Dollar is the fact Asia's and Europe's financial difficulties as well as the power brokers of International Banking for the present moment have ordained that the Dollar's reign remains.
The dollar has been the preeminent global reserve currency for most of the past century d so far into the 21st century. Its status as the dominant world currency was cemented by the perception of international investors, our own Federal Reserve, and many major foreign central banks, that the U.S. financial markets are a safe haven. That perception has ostensibly driven by a significant portion of U.S. capital inflows, which have surged in the past two decades. The beneficiaries of all this capital flow are, the 1%. Not surprising there either. What is important to realize is the fact that the dollars dominance has allowed the United States to live beyond its means, and is continuing to run up sizable current account deficits financed by borrowing from the rest of the world at cheap interest rates. We forget that the deficits are contributed by the loss of millions and millions of middle class wage earning jobs that would have added that extra tax revenue that would negate the need to run up those deficits in the first place. Moreover, the fact that many perceive the United States as a rich country enjoyed by only the smallest percentage of the population all the while the majority languish in a perpetual state so often associated with third world status. Our financial policies have contributed to the fact that the United States has been a net importer of capital from middle-income countries like Japan and China. And, we now are seen as a prime example of global current account imbalances. We have to remind ourselves that such up hill flows of capital are contrary to the prediction of standard economic models that capital should flow from richer to poorer countries. All this have led to calls for a restructuring of global finance and a reconsideration of the roles and relative importance of various reserve currencies. Meanwhile the Dollar reigns.
The 2008 global financial crisis, whose aftershocks continue to reverberate through-out the world economy, led to heightened speculation about the dollar's looming, if not imminent, displacement as the world's leading currency. Sure, there are indications that the dollar's status should be in peril. The United States is beset by a high and rising level of public debt. Gross public (federal government) debt has risen to over $16.8 trillion roughly equal to the nation's annual output of goods and services. The aggressive use of unconventional monetary policies by the Federal Reserve has increased the supply of dollars which has created risks in the financial system. That increase of the money supply though only went to the financial sector and did not have any impact on the general public. Only the top 1% benefited from the increased monetary supply. Least we remind us that our political gridlock in Washington has made U.S. policymaking ineffectual and, in too many cases counterproductive in driving any semblance of an economic recovery. There are also serious concerns that recent fiscal tightening most notably by our Republican led gurus in Washington have actually made our economic picture much bleaker because of their intellectual incapacity to comprehend our current financial troubles. They have already stopped so many efforts to relinquish the strangle hold of economic oppression on the American public. So far all this has constrained the government's ability to undertake expenditures on items such as education and infrastructure that are the focal points for long-term productivity and economic growth.
All these factors should have set off an economic decline in the United States and hastened erosion of the dollar's importance. But the reality is starkly different. The dominance of the dollar as a global reserve currency has been barely affected by the global financial crisis. Questions now have to be asked. How is it possible with the US in an economic stupor? And, with the Fractional Reserve Banking method as the rule of law within the United States and much of the world's monetary system when the Dollar is not backed up by gold how long will the Dollar reign supreme? We have to realize what impact our enormous debt has on the real strength of the Dollar when the gold standard of years ago no longer applies. The impact of the Dollar when so much of the population is just struggling to survive is yet another indication that the Dollar will fall. The impact of the Dollar while our illustrious Republican led legislature sounding war drums yet again have made it an almost certainty that the Dollars reign is about to come to an end. The question now is what currency will take the Dollars place if conditions remain unchanged? Could it be that the hand writing is already on the wall for it is just a question of when the Dollar will fall?
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