FYI: The Dollar Index

Watch The US Dollar Index -- A Dollar Panic May Be Ahead

(Note:  This is by way of JWR at SurvivalBlog.  I have posted it here for future reference -- mine, mostly.  Wassail.  -- C.)

I'm often asked about my mentions of the US Dollar Index in SurvivalBlog, and about the Dollar Index ticker link at my Investing Recommendations page. This foreign exchange (FOREX) market index is often mentioned by its shorthand names ("USDX", "DX", or less commonly, "USDI"). It measures the value of the U.S. Dollar (USD) relative to several of our country's major trading partners. Although the mix has changed over the years, presently the index gauges the value of the U.S. Dollar versus six currencies: the Euro, Japanese Yen, British Pound, Canadian Dollar, Swedish Krona and the Swiss Franc. The USDX was started in 1973 with a base value of 100, and has been calculated versus this base ever since. So a value of 110 would mean that the U.S. Dollar experienced a 10% relative value increase, over the life of the Index.

When I last checked, the USDX was down to 73.896, and that is a troubling number. You see, the high water mark for the USDX was 164.7 in February of 1985 and the all-time low was 70.7 in March, 2008, during the worst of the global credit crisis. It is noteworthy that the value of the Dollar probably would have fallen even lower in 2008, were not for the fact that the Euro was having serious problems of its own. Most of the lows in 2008 were around 72, and that is the number to watch for. A break below 72 would signal a major loss in confidence in the US Dollar, and possibly precipitate a full-blown Dollar Panic. Unlike 2008, we can expect no "Dollar Rally" if the USDX again drops below 72. This time there won't be a "bounce" because there is no longer much of a floor beneath the U.S. Dollar. Currency traders now perceive the U.S. Dollar for what is truly is: kindling. Unless monetization of the Dollar ("Quantitative Easing") ends soon, there is a strong likelihood of mass inflation in the U.S. and a rout of the Dollar in the FOREX markets.

Don't under-estimate the influence of the FOREX markets. They are the world's most traded markets, with more than $3.2 trillion in currencies traded each day. Clearly, the FOREX markets are seeing some tidal shifts in currency pair trading. For example, just a few years ago the Australian Dollar was jokingly nicknamed "The Australian Peso", but just recently (April 25th), it hit a 29 year intra-day high of USD $1.0777. Meanwhile, the Swiss Franc has advanced to USD 0.88576 and the Canadian Dollar is relatively strong, at USD 0.95391. You can track daily currency exchange rate moves at Oanda.com.

An aside: Some journalists refer to FOREX as a singular: "The FOREX market". But since they are actually multiple markets that are being traded 24 hours a day, five days a week, in multiple venues, rather than at one central clearing house. So, properly, the FOREX should properly be described as plural, namely "The FOREX markets".

Regardless of your interest in stocks, bonds, the credit market, or the precious metals market, you should watch US Dollar Index. It is not just something of interest to travelers or to currency speculators. Rather, it is an important barometer for the U.S. Dollar. As I've mentioned before, it is likely that the U.S. Dollar will lose its reserve currency status soon. And when it does, be ready for substantially higher interest rates, a huge loss in the Dollar's buying power abroad, and mass inflation, at home.

I once again urge SurvivalBlog readers to get out of US Dollars and into precious metals and other useful tangibles. Presently, silver and common caliber ammunition are my two favorite tangibles.

When the Dragon Comes

Three months.

Those two words have kept repeating themselves in my head, day after day, for over a week now:

Three months.

What brought it on?  Mike Ruppert, the fucker.  Found his latest "warning" video via Dave at Decline of the Empire.  Dave, for his part, thinks it's bullshit.  He may be right, but...

Ruppert's warning?  We "have until July at the latest."  For what, you ask?  Why, nothing less than the next stock market crash.  Yep, another boy crying "wolf," folks.  Nothing to see here, move along... move along.

Right?

Well, I guess.  Only, I can't shake the feeling that he might be right.  Ruppert bases his claims on the fact that second quarter earnings reports are due out in July.  The second quarter of 2011 includes the period of the disaster in Japan, the world's third largest economy.  He expects the reports will be especially dismal -- dismal enough, even, to send investors scurrying away from the markets in droves.  Dow 6,000, or something like that.  The Next Leg Down.

Now I was, in all honesty, not particularly ruffled when I first listened to him.  After all, this is a guy who charges people for disaster porn.  Kind of.  He's been right before.  His video Collapse was, well, riveting.  But, as Dave reminded us, Ruppert makes his living broadcasting "alerts" from time to time.  So, there.

Nothing to worry about.

Then I hear that the Fed's second round of Quantitative Easing, or QE2, is set to end June-July-ish.  What does that mean?  It means the stream of hundreds of billlions of dollars that are being created and funneled into the banksters' coffers, which in turn are largely responsible for the current stock market bubble, will end.  The phony bull market will have to fend for itself.  Unless, as most prescient watchers suspect, Bernanke will proceed with QE3.  This will have the effect of creating even more excess "liquidity" in an economy already drowning in increasingly worthless dollars, possibly leading to a hyperinflationary scenario.  We are already seeing rampant inflation in the commodities markets (watch the price of corn for a few days -- you'll be amazed at its wild fluctuations), even though Bernanke does not count food and energy prices when he calculates the rate of "core" inflation; the latter, it seems, is mostly to do with the price of iPods, which are apparently not expensive enough.

Move along, move along.

THEN there is the matter of the Debt Ceiling, which we are going to slam against rather presently -- May, I think.  There, I believe we are screwed either way.  If the debt ceiling is raised, then our debt continues past Mars on its way to the asteroid belt, and our already shaky credit rating will likely take a hit, making the cost of borrowing even more onerous, leading of course to insane additional amounts of debt.  If the debt ceiling is not raised, then more programs will be cut, driving down GDP (government spending accounts for much of our GDP these days) and making life miserable for the thousands of public sector workers who would presently find themselves out of a job -- not to mention the cuts to programs that many poorer Americans (that is, nearly everybody) rely on.  So, yes, "Fooked, laddie," either way.

All this will play out against a backdrop of insane unrest in pretty much every country from Morocco to Pakistan, where we are engaged in three wars, and where most of our oil comes from.

And all this will play out during the North Atlantic Hurricane Season.

And all this will play out by August.

So, yeah.  Me=Worried Man.  And I have talked to absolutely no one about it.  Why?  Other than the fact that I am probably worried over nothing, there is this:  no one wants to hear it.  They really, really don't.  I think they are sick to death of my warnings, my troubled looks, my strange behaviors.  But here, in the blogosphere, anything goes, right?  Here, on my own blog, I can say what I want.  So here, now, I will say this:  prepare, while you still can.  I hope I am wrong, and if I am, it will not be the first time.  It surely will not be the last.  But I believe things are coming to a head, and right soon.  We are about to experience the Next Leg Down.  It will be bad.  Not "Mad Max" bad, but bad.  I may lose my job.  Many of my friends and family members may lose their jobs.  I hope it does not play out the way it is looking to, as I am not ready, and will not be ready in three months. 

But there it is.  Do with it what you will.  Ignore, laugh, question, I don't care.  I guess I just really needed to get the worry off my chest, even if it is to the great faceless Interlink. 

     "Perhaps the King under the Mountain is forging gold," said another.  "It is long since he went North.  It is time the songs began to prove themselves again."

     "Which king?" said another with a grim voice.  "As like as not it is the marauding fire of the Dragon, the only king under the Mountain we have ever known."

     "You are always foreboding gloomy things!" said the others.  "Anything from floods to poisoned fish.  Think of something cheerful!"...

     ...But there was still a company of archers that held their ground among the burning houses.  Their captain was Bard, grim-voiced and grim-faced, whose friends had accused him of prophesying floods and poisoned fish, though they knew his worth and courage...

     -- J.R.R. Tolkien, The Hobbit, Chapter XIV:  "Fire and Water"

Keep your bows handy, and your quivers full.

Wassail, friends. -- C.

The Doomer's Art; Or, Why Bother? You Should Be Learning Simple Dentistry.

Good.  The image got your attention.  It always gets mine.  ("The Moon's Rapture," indeed.  Thank you, Frank.)

A recent back-and-forth with another Doomer at Guy McPherson's site Nature Bats Last (NBL) inspired an unusual amount of brain activity on my part, which may be responsible for the headaches I've been having, and not the allergies I had ascribed them to.  As I prefer to continue believing, as I always have, that I am of a superior nature, and not prone to trifles such as allergies, I will assume it was the discussion at NBL that triggered the discomfort.

Actually I chose the image above for a Real Reason (RR).  The gist of the conversation at NBL was about books; specifically, their usefulness during and after the bottleneck of Collapse, and the possiblity that some knowledge contained therein could contaminate the future with the knowledge that Did Us In in the first place.  The wonderful book A Canticle for Leibowitz was cited.  Of course I read it years ago, the "of course" having no real meaning here, as there are many, many books of import which I have not yet read, and likely never will, even if they sit on my bookshelf, looking for all the world like "Why, of course Chris has read us," until a closer inspection reveals smooth (that is, un-bent) spines, meaning I have never actually read them.  (Damn you, Oliver Twist and Go Down, Moses and Other Stories!)  Leibowitz basically is about a post-apocalyptic future where some knowledge from a previous civilization (ours) is found by a monastic order, a new civilization is created based upon the knowledge of the old, and is destroyed, by (again) the old knowledge.  (Why do future civilizations always seem to have as a cornerstone a giant block of Stupid in their foundations?  But I digress.)

Now I argued for the use of books as storehouses of information regarding a post-carbon lifestyle, with stuff like the Foxfire series in mind.  My friend argued that book-larnin' (my words, not hers, there) got us in this mess to begin with, and we basically need to start over.  Other voices chimed in to support things like poetry and philosophy and other artsy kind of stuff, to which she said, basically, that the beauty of Nature was all she needed.  And really, who can argue with that, especially with the sights, sounds, and smells of Spring, whose tapestries are -- I must admit -- intoxicating? 

In the week or so since that online conversation, I've done a lot of work on my current fiction project, which is set in a post-apocalyptic future.  I don't know what inspired me, but I finally finished Chapter 1, and have moved on to Chapter 2, and thoroughly enjoyed myself.  I cannot remember having such a good time with my writing.  (That may or may not be a good thing.)  But I got to thinking:  does any of this even matter?  What if -- aside from the fact that it likely will never be finished, anyway, and aside even from the fact that no publishing house in this Quadrant will care to pick it up, if it actually gets finished -- what if things like novels, and paintings, and sculpture, and screenwriting, and songwriting, vanish along with industrial civilization?

Seriously, how am I supposed to reconcile these two parts of my psyche:  the artist/Creator part, the one Tolkien spoke of as having the instinct to create as part and parcel of being made in a Divine Image of The Creator (which, incidentally, makes all Art divine, according to My Man J.R.R.); and the Doomer part, the one who has accepted the direction of events, and who has for some years now been adapting his meager mental processes in anticipation of said events?  In other words, do I keep writing; or do I finally get around to reading Storey's Guide to Raising Rabbits, and generally focus my energies on continued prepartions for the permanent Grid Down world that is, without a doubt, coming?

Honestly, what good will another novel be in the world of Jim Kunstler's World Made By Hand?  Who will have the time to read one, even if it survives getting gnawed at by hungry rats, exposure to rain as buildings crumble, and/or used as kindling by people trying desperately to stay warm? 

In all honesty, I don't think I've been asking myself the right question.  It is not, "How will my Art benefit anybody, now or in the post-Collapse future?"  Rather, it is, "How does my Art benefit me, now and post-Collapse?"  And the answer, I believe, lies in the making of Art, as I was reminded recently during my own burst of creativeness.  I did not, as I wrote, envision riches that would come of it, or critical praise, or notions of my own immortality (well, maybe a little of the latter)(well, maybe some of the former, too); instead, I found joy, the joy of creation, surely the same spirit which Tolkien saw as divine.  Maybe it is, kind of.  Maybe we don't really have a word for that feeling of putting together something that we and other people can recognize as universally beautiful or meaningful, or both.  We are quite as capable of weaving our own tapestries as Nature is.  And maybe in that, more than anything, we are shown by our own Art to be truly one with Nature the supreme Artist; as we of course are.  So as both Nature and the artistic impulse transcend Collapse, Art becomes a matter of course, as does Nature.  We need not wonder as to its use; it simply Is, and we are as much a part of it as we are of Nature.

So I imagine that, as long as Nature has its Springs, so too will people have their Art.  When either end, humans will not be around for long to mourn their passing.

Of course, I could just stop asking so many damned questions.  And now Storey's Guide to Raising Rabbits is glaring at me, saying it will be no preening Oliver Twist on my bookshelf.  "You will raise rabbits," it whispers suavely (and, oddly enough, with a Russian accent), "and I will show you how."

Probably.

Wassail, friends. -- C.