Friday, December 19, 2008

You Will Inflate Dammit!

Over the last couple months the dollar has been shot, stabbed, strangled, and thrown into an icy stream. Thus, quite sensibly, investors are running away from the dollar to other currencies, and much of the advances made in the US dollar index since August has been wiped away. This is still a highly volatile state of affairs.

But yeah, the U.S. dollar is a horrible store of wealth at the moment. With overnight rates now at 0%, and $850B in newly minted bills (now up from $650B) ready to be shoveled into the economy, plenty of systematic effort has been made to devalue it.

Though the U.S. dollar index (USDX) is the usual way the value of the dollar is gauged, this blog posits that a better measure still is purchasing power in its resident economy. Generally, I keep my eye on stocks, houses, commodities, and gold. The coming weeks will tell if the Feds changes in monetary policy will affect the deflationary trends in these sectors.


East.Bay.Miser said...

Option ARM & Alt-A reset wave about to hit as subprime wave recedes. Economy will keep tanking for atleast another year.

East.Bay.Miser said...

-for some reason html links not saving. used to work

SF Mechanist said...

Links showed up for me in both posts. I hear the Fed is hoping Alt-A resets will me modest now that it's at 0%.