Thread: Why a STRONGER DOLLAR NOW??!!

Originally Posted by BIGBULLY

With obvious inflationary pressures now in play and expected to accelerate going forward, now is the time to avoid a major market melt-down.

Guess it depends on who you talk to regarding inflation. It's easier to deal with inflation than it is to deal with recession/depression, so I wouldn't plan on a rate increase until late 2008.

It's not the Fed's duty to worry about the dollar, that's all up to the FX traders who sit in front of their computers 24 hours a day staring at the Fib Lines of Cable and Swizzy. The US Gov't could go on a buying spree of US Dollars and it wouldn't even effect the short run. Besides, the Treasury has made it clear that they are pleased with the 'benefits' of a weak dollar.

If the ECB raises rates, then they've clearly hit the panic button. Believe me, I'm ready for the dollar to strengthen, but the growing global economy and oil shock has changed things forever.

For all we know the Treasury and G7 may be quietly buying dollars right now - they've intervened like this in the past. Inflation will remain anchored as long as the GDP is less than 2%. Where is all the recently raised liquidity going to turn while we have a yield shortage? They won't be buying Vietnamese dong that's for sure. No they will be buying stocks that have the capability to raise their dividends - IMHO.

Originally Posted by Birchtree

For all we know the Treasury and G7 may be quietly buying dollars right now - they've intervened like this in the past. Inflation will remain anchored as long as the GDP is less than 2%. Where is all the recently raised liquidity going to turn while we have a yield shortage? They won't be buying Vietnamese dong that's for sure. No they will be buying stocks that have the capability to raise their dividends - IMHO.

Why not buy Euros, and European bonds? Forget the Viet currency, they may be up and coming but they are not even close to *there*, and Asia in general seems to be coughing at least a little (or definately have a cold in some cases) in response to the problems in their local and the US economy.

Originally Posted by Bullitt

I wouldn't plan on a rate increase until late 2008.

LOL!

A hesitant and so far difficult economic recovery, tame and nonexistant inflation and severe credit headwinds suggest that monetary policy will need to stay very easy for at least another year. Waiting on another weekly jobless claims number this Thursday - if less than 512,000 up goes the market.

Originally Posted by Birchtree

A hesitant and so far difficult economic recovery, tame and nonexistant inflation and severe credit headwinds suggest that monetary policy will need to stay very easy for at least another year. Waiting on another weekly jobless claims number this Thursday - if less than 512,000 up goes the market.

ORIGINALLY POSTED IN 2008, Let's try it again here in 2011, LOL.....I prefer the lower rates like most equity investors (and consumers), however, Increasing the rate for a macro market effect might be that silver bullet that sets the stage for the long-term (with TSP transfer restrictions we are forced to play things longer now) so FED action is all the more important now for any significant turn around.

With obvious inflationary pressures now in play and expected to accelerate going forward, now is the time to avoid a major market melt-down. It would certainly signal somewhat of a “bottom” I think, to possibly, with a burst to shake up and turn around the market. Of course, right now a rate hike would NOT bode too well with the market in the short term, of course; but once absorbed, we’d be set up for sizable bull rallies, not just knee jerkers that TSPers can no longer take advantage of.

Speculators might even take the rate hike as a hint that its time for OIL to go negative since the FED chooses to now strengthen the dollar. The bond market will certainly unload and shift investment to more a viable, certain (less risky) equities market.

And the global response?? Well, we shall see when, if, the FED takes action later in the year to put some muscle behind the dollar. But I think we need it NOW!! - BigBully

Déjà vu I hope this isn't 2008 all over again.