http://finance.yahoo.com/currency/convert?from=USD&to=EUR&amt=1&t=5y
http://finance.yahoo.com/currency/convert?from=USD&to=CHF&amt=1&t=5y
http://finance.yahoo.com/currency/convert?from=USD&to=GBP&amt=1&t=5y
http://finance.yahoo.com/currency/convert?from=USD&to=AUD&amt=1&t=5y
http://finance.yahoo.com/currency/convert?from=USD&to=RUB&amt=1&t=5y


Explanations I've heard are that because it's "the worlds reserve currency".
But it's just insane.

The US government has a deficit that can only get bigger.
Government revenues will decline in a recession and make it much worse very quickly, not to mention all the "stimulus" spending.
Most of it will probably be monetized by the fed, so that's just going to make things worse.

The Fed has been expanding the money supply like crazy, furthermore they don't even publish M3 numbers anymore, surely that's a little bit of an indication as to what the future holds.
(http://articles.moneycentral.msn.com/Investing/JubaksJournal/FedKillsAKeyInflationGauge.aspx)

There's still the whole trade deficit thing too.

Real output is falling(the whole recession thing), money supply is increasing(and we don't even know for sure by how much), therefore at some point the price level has to go up - the purchasing power of the dollar has to fall.

I realize that purchasing power parity for exchange rates only really holds in the long term, but what is happening right now with the value of the dollar is insane, it's flying in the face of reason. I don't want to make it wordy, basically - not only is the dollar not weaker, it's stronger.
What the fuck?

Expected real yields on 'risk free' US debt (government securities) are negative - even if worked out using the official (bullshit) inflation numbers. Why the fuck would anyone want to buy US dollars right now?

Are foreign central banks propping it up or something?

I recall reading an article attributing it to US citizens selling off overseas holdings, causing a short-term bubble on the dollar. I can't find the article, so I can't claim that it's accurate, just throwing the suggestion out there.

Interesting - in all seriousness every explanation I've seen in the media has basically been built on the "reserve currency" bullshit.
That is a decent explanation though, which would mean we ought to expect the decline to resume now.

peter schiff is the man you want to listen too
http://www.youtube.com/watch?v=pGHODRNJqRo

Almost all major oil exporting countries trade oil exclusively in dollars. In countries like Brazil, where they don't need dollars to buy oil, the dollar is hardly worth anything.

Almost all major oil exporting countries trade oil exclusively in dollars. In countries like Brazil, where they don't need dollars to buy oil, the dollar is hardly worth anything.

Yes I realize that, but that doesn't explain the recent increase in the value of the dollar relative to other currencies, even if it does explain why the dollar hasn't fallen faster.

peter schiff is the man you want to listen too
http://www.youtube.com/watch?v=pGHODRNJqRo

Yes. Pretty much.
I guess de-leveraging of American firms is the best explanation.

(It's incredible that no one has taken any notice of savings(or more to the point consumer debt) and just as importantly *who* is saving/in debt.)

I've been wondering the same thing.

Maybe it is because consumption in the USA is expected to rise.

I've been wondering the same thing.

Maybe it is because consumption in the USA is expected to rise.

Quite the opposite. Prices are falling because demand is expected to get low. The dollar is stronger against other currencies because it's up to US consumers to get the world out of this mess.....sadly.

It's a dollar rally!

No matter which way you look at it, deflation is bad for our growth-dependent economy.

The price of oil, houses, metals(I collect copper from my part-time job and it's gone down by more than 1/2) have all gone down because demand is down.

October was the worst month for retail in years. Car companies have all gotten brutally assfucked(understatement) this past quarter. People are pulling investments out of real estate and commodities and oil because they feel the bubble is burst and realize people aren't willing to buy.

Chris martenson put it best

But all the bailouts can do is keep an ailing company afloat for a while longer; it cannot fix the problem, which is that the vaunted US consumer has finally run out of steam.

http://www.chrismartenson.com/blog/deflation-still-winning-day/8596

If you have money saved up, you can enjoy low prices on shit, but you yourself are well informed about our nation's failure to save (http://www.chrismartenson.com/crashcourse/chapter-13-national-failure-save). What good are rock-bottom prices without easy credit? Car companies are especially getting assfucked. The big 3 need no mentioning, but even Toyota got its credit rating lowered to AA. Toyota is also begging for a 40 billion euro bailout in europe.
Per capita sales in the U.S. will fall to just 37.6 cars sold per 1,000 people in 2008, marking the lowest per capita sales rate since 1961. Moreover, October 2008 tallied the lowest per capita sales of any month since World War II.
http://www.leftlanenews.com/recession-2008-just-how-bad-are-new-car-sales.html

If the US suffers significant deflation that spreads to wages they're FUCKED. Consumer debt would become impossible to service.
The fed and government seem to realize this at least.

The only way to prolong the inevitable collapse is extremely inflationary, and if it isn't prolonged it happens earlier.
I wouldn't want to hold a large amount of US dollars in either case.