When something changes its course, it is wise to know why and where it is heading. King Dollar moved two months in two hours last week. Gold dropped over $100. in the same time span. I can hear Vince Lombardi yelling, "What the hell is going on out there?!"
Fibonacci Day
Last Friday was June 18th. or 61/8, a strong Fibonacci level. However, there are other days that match the sequence. So, no! It is not the reason. The reason is...
Inflation!
Even the Fed Chairman had to address it. He admitted its presence, but called it a "transitory" effect of the economy being turned back on after the effects of the pandemic and stimulus.
Crime Scene...
Consider that the G-7 nations met in the prior week. You have to speculate the discussions. There are many issues. Trade and tariffs are hot topics as well as defense. Who pays? This is the crucial point. As par for the course, it will be the US. Then, the other partners must consider that the US is worse off than their economies, and if not worse off, the US bears the brunt of defense measures. So, the cumulative effects of money printing could hurt the UD dollar and then, all nations suffer through trade.
If one were to step back and observe the dollar in relationship to the Euro and Yen even before the pandemic, it was declining in value. A few nations like Russia and China are attempting to wean their economies off the dollar. The effects of this could have been seen with the dollars value in the basket of currencies. It was declining there too. Then, the US Congress is debating more stimulus. This bodes for more future declines in the value of the dollar. If one were also to compare the dollar to its old "gold" value standard back in 1971, all the money printing would mean bankruptcy. What saved the dollar was the move to "petrol" dollars. Countries had to exchange their currencies to buy US dollars to buy oil and other commodities. In addition, the advent of the Euro to global trading. This union also had to print to protect members like Greece, Spain and Italy as well as others.
Actions by the G-7 went into effect, fast. This is one of the reasons why the dollar rose beyond normal.
Suspect #1...
Did you know that the data for core inflation is due to be released this Friday? The Fed will speak, yet again. This is one way that they control the temperature of the market and economy. They have other ways. The Fed also speaks behind closed doors. They have definitely supported the rise in the value of the dollar. Wall Street has a saying, "Don't fight the Fed!" The Fed also announced a change in policy. They will raise interest rates sooner. They propose two increases. So what! The rate will still be below 1%. Get real! The market overreacted, especially gold, but then again, fiat hates gold. It is the battle of a solid currency that promotes a stable living standard to one of debt with rising inflation and a lower standard of living. Actions speak louder than words. Last week, we saw the actions of the Fed.
We saw their manipulation of the dollar. A rising dollar tames inflation. The ego of the Fed and its chairman will be on display this Friday. They will toast themselves as their view of inflation as transitory. They will appear correct. They are not.
Charts
They are saying the dollar faces strong resistance at 93.50. Last Friday, it closed at 92.21. Dear Reader, even if the dollar breaks though that resistance point, it means nothing. Step aside! Look at the big picture. You will see that even at 96, the dollar will only be back in its consolidation range and at the bottom level at that point. Then, watch and wait! If Congress passes another $6 trillion infrastructure bill, that will amount to over 8000% increase n the money supply. You cannot print with impunity.
Scary thought...Roughly 77% of all the dollars ever printed, were created since last March.
Those new dollars will be worth less than before. This is inflation! This is what banks are for, loans which is debt. Citizens cannot print to cover rising costs. This is how the stealth effects of inflation slowly erodes a standard of living. It is why the US is not even in the top twenty nations in standard of living. The facts support our view. We have a government that is bought by money and its legislators who violate their responsibility under the constitution, "to promote the general welfare." They are only concerned about reelection and their welfare. We have surging crime and media misinformation. We have crumbling infrastructure and slums in all our major cities. We have over 20% in poverty. We have over 20% who are low-wage earners. We have countless millions who live paycheck-to-paycheck. The point that the US is a rich nation is BS! It is ego. It is not reality.
Other clues...
Copper and lumber recently hit all-time highs. Last week, the two retraced. They only returned to their breakout point. Keep an eye on them, especially, Dr. Copper. China has recently sold its reserves of copper, zinc and aluminum. Does this mean anything? This month, yes. Future? No. They will resupply at a future date.
Emerging nations...
They will be hurt with a rising dollar. This is exporting inflation. It is not intended, but as the world's reserve currency, this is a fact of life. These smaller economies will pay more for commodities. This will force them to raise prices. When the dollar begins to falter, US citizens will feel more inflation because everything we have is imported and all imports will cost more. Clues will surface if the dollar breaks its recent low of 89.535. With that said...
King Dollar is not looking very good at this point in our history. Our leaders run deficits and the Federal Reserve supports it with debt. We need quality jobs that pay a living wage. We need tariffs to protect companies and workers. Everyone else does it and they all criticize us when we do it. This should be the central point in any discussion or summit. Fair trade that gives all a quality of life. Our nation and the West may have separation of state and church, but if we are Christian nations, we need to act with His teachings.
- Therefore, if anyone is in Christ, he is a new creation. The old has passed away; behold, the new has come.
- 2 Corinthians 5:17
The first step leads back to what we, at Evolution say, "End the Fed!"
