Dollar Sobers Up Despite Fed PunchBowl

xaron

i have two scenario for eurusd according to one scenario in dow jones.
i am a bit surprised by whats is happenign in the djia the last two days but wait till this range is terminated .
january eurusd back at 1.48

Xaron, evan
the eurusd story is like a payback scenario. once u let me be strong and then its my turn to a limit. these currnecy pair implication in global imbalances or balances must be adjusted to economic conditions. right now we are still in a period of imbalances corrections. these imbalances are the reasons why we have crisis not the subprime or anything else that are just catalyst.
imbalances are negociated around a table and the expansionry model that come through are consensual.

Xaron, all the death to the dollar models are built on future growth and investing and lending. All of the outstanding debt can be wiped out in the fashion that debt is wiped out. It isn't the same as borrowing for individuals. The U.S. can borrow and invest in the same way the Japanese did in the 90s. Japan borrowed a higher percentage of GDP than the U.S. has--yet it still remained in deflation (and for whatever reason, still remain aligned with the U.S... crucial decisions to come for the future of Japan when it comes to potential alignments eastward with big china) So the whole notion that the U.S. is in debt that, that it is "printing money" is silly. They are creating the incentive to BORROW money for the top 2% of our economy, but they aren't printing it for the rest of us. That means the money only exists on paper. And one day the paper is worth X, but the next week it could be worth Y. I owe 50 grand on student loans, and if I were to pay it back, it would be in circulation. If I default, the money just vanishes, and the value of the lender decreases. if everyone does this, as is happening all over the place with houses, and it spreads to other assets, then it will destroy the imaginary dollars, making the real dollars seem more scarce. Only the drug dealers can debase the dollar then!

@Xaron. Yes thats what im thinking!

I think the fed and ECB are overstated in their effectiveness. It doesn't matter if milton friedman had an answer to the 30s writing in the 60s and 70s.. monetarism has never been tested against deflation. If there is a shrinking space of profitability, then you'll just end up with desired credit but no real borrowers. This will force the cash play and force down equities. If you don't have enough borrowers, it doesn't matter if you put rates at negative 3% if the loss on return is greater than that. This is why I think the interest rate narrative isn't a good explanation.