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Connecting the Dots: Our Dollar Continues Multi-Year Decline as Both Political Parties Are “On the Take”

Posted by Larry Doyle on February 15, 2011 8:55 AM |

In the course of my regular early morning reading (thank you to the regular readers who feed me these resources), I came across some fabulous work.

1. The Dallas Federal Reserve puts forth an enlightening piece entitled Global Economic Conditions. The 43 page treatise covers a wealth of information but my attention was grabbed primarily by the graph highlighting the continued decline in the core rate of inflation on page 11, and the ~20% decline in the value of our U.S. dollar over the last decade versus other major currencies on page 38.

While skyrocketing food and energy costs globally will likely continue to foment civil unrest in selected nations, Fed chair Bernanke is assuredly singularly focused on that continued decline in the core rate of inflation. How will he respond? Many individuals whom I respect believe Bernanke will continue to flood our economy with more and more dollars via quantitative easing. What does that portend for the value of our greenback? It ain’t good. What do others think of our Federal Reserve and fiscal fiascos? Let’s navigate further.

2. Jesse’s Cafe Americain, an intriguing blog with an international bent, provided a superb perspective yesterday on the ongoing budgetary bungling and fiscal follies in Washington:

The idea that you would allow what are essentially short term financial speculators to make important public policy decisions with far-reaching, long term consequences seems unusual or even lunatic in most parts of the world, and is certainly not a trend in historically successful organizations. Within the metrics of energy and infrastructure, the US government is playing checkers in a game of Go. Its greatest leverage now appears to be an ability to kick over the global economic playing table in an act of self-destruction. And that threat is wearing thin. A Japanese perspective on the US budget:

“Unfortunately, the risk of the whole ponzi scheme crashing sooner rather than later is going way up, rapidly They want the dollar to go down by 40%, but I think they are going to lose control, and they might wind up with a 90% panic drop in a few months.

3. To add further fuel to the fire, embedded in Jesse’s work is an equally enlightening Bloomberg interview with Columbia professor Jeffrey Sachs. Although I find my personal political leanings to be counter to those provided by Sachs, I found myself agreeing with much of what he had to say about the fact that both our political parties are beholden to interests misaligned with our nation as a whole.

Our future rests in the hands of crowds from both sides of the aisle who are massively conflicted and could not truly manage their way out of a paper bag let alone trillion dollar deficits. Is it really any wonder why the value of our greenback continues its long term decline? Not here it is not.

Would you want the crowd in Washington to manage your personal finances? Do you think they would even know how to review a basic balance sheet or an income statement, let alone the capital structure of a business? Sachs provides a strong condemnation of our financial charlatans in Washington and says both political parties are “on the take” in this video. Click on image to begin the video clip: My Libertarian leanings grow ever stronger.

Navigate accordingly.

Larry Doyle

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I have no affiliation or business interest with any entity referenced in this commentary. The opinions expressed are my own and not those of Greenwich Investment Management. As President of Greenwich Investment Management, an SEC regulated privately held registered investment adviser, I am merely a proponent of real transparency within our markets so that investor confidence and investor protection can be achieved.

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