Economic Update

< 6 mo. Dollar in FOREX

This forecast filed on the day the US DOW Industrials index breaks 9000, just when things are beginning to look rosy... the index rose because the dollar is worth less.

Watch for the consumer prices index to accelerate in the US. This is part of the Mr Obama's economic policy. The US base inflation rate, so-called 'narrow money', is at 18.4%.

The US has no foreign currency reserves. In the past, the strength of the free American economy made the dollar desirable as a reserve even in lieu of gold. The dollar's present weakness is the single reason why foreign reserve banks are steering back to gold.

If the dollar loses its international standing as a reliable store of value, the outcome is hard to forecast. A few predictions are:

1. International oil prices will no longer be in dollars. This will lead to less stability in American domestic oil prices.

2. Import retail prices will go higher than economically required because importers will attempt to offset uncertainty in exchange rates. This will have grave consequences in the electronics market.

3. Only very wealthy will be able to travel abroad.

4. Overseas American military presence will be become difficult to maintain. The US has always attempted to lease bases. If the dollar loses international strength, this will be harder to do.

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Inflation's principle impact domestically is higher consumer prices. If Mr Obama has timed this just right, the economy will appear to recover due to the illusion of increased liquidity. The negative impact of rising prices (more accurately, the declining value of the dollar) will not strike hard until after the 2010 elections.

The parallel to Mr Nixon's economic fraud and 1972 re-election are intriguing. When prices go up, people have a natural tendency to blame the retailers, not the jackasses debasing the currency. Mr Nixon won re-election.

"This note is legal tender
for all debts public and private"

Mr Obama and the Democreeps hope to enhance their control of the US government in 2010 through a demonstration of fraudulent economic wizardry. People vote their pocketbooks, not their future. But in the Democreeps' Ponzi scheme, the future is at risk.

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Raw economic data on the human toll of this Democreep Depression.
July 18 Jobless Claims (published July 23)
Weekly Jobless Claims (expected 565K; previous 522K)
Weekly Jobless Claims Net Change (expected +43K; previous -47K)
Continuing Jobless Claims (previous 6273000)
Continuing Jobless Claims Net Change (previous –642000)

On Friday the University of Michigan's July consumer confidence index is released. Preliminary results show a waning belief in the prospects for recovery. Sustained weakness could be a bad sign.

Democrats controlled Congress (where the laws are made) when this started in 2007. We get the crumbs from their table.