Economics 101: The US Dollar is Not Strong

By Karl W. B. Schwarz
5-28-14

I have not been vested in or dependent upon the USD for over 8 years. The following is a brief explanation as to why.

Regardless of what the ‘green up arrow’ and ‘red down arrow’ say on CNBC, MSNBC, and the other mainstream media outlets, the USD is not strong and it not wise to describe a drowning person (or nation) as rallying when it is the last gasp of air. Its value has continued to erode over the past 40 years due to fiscal irresponsibility of the US government and the Federal Reserve Bank.

The US government has a propensity of being wasteful and invests in just about everything except fixing what is wrong in America. Their lock-step aims of global empire based on fascist militarism and petrodollar supremacy has failed and is in decline even as you read this.

Even the US economy itself is now collapsing due to the erroneous business plan and methods of Washington DC.

Read this article and see the losses that US retailers suffered just in the first quarter of 2014. I warned DC many years ago that they cannot have a Consumer Based Economy while their policies are crushing the middle class and the consumers. It does not take a Harvard or Wharton MBA to grasp that ‘kill the consumer equates to kill the consumer based economy’.

http://wealthydebates.com/20-big-box-retailers-take-major-losses-first-quarter/

When even the discount chains are showing such losses, the harm within the US economy to the consumer has set in.

This chart is the reality of the USD versus the Swiss Franc since 1970. Note the effects just since 2000.

As of today when this was written the USD to CHF is at .8975. In Switzerland there is no minimum wage and people make 20 CHF per hour right out of high school. Compare that to the poverty level minimum wage of the USA at $7.65 per hour. The Swiss voters recently rejected a national minimum wage law of 22 CHF per hour because they do not want people flocking to Switzerland that do not deserve to earn such wages and are only semi-skilled compared to the Swiss.

Many in the USA are suffering from the illusion that the stock market is an indicator of the health of the US economy. When looked at in terms of reality, that being the true valuation of the USD, the numbers are actually down over the past 14 years, not up.

Recent reports have indicated that Warren Buffett, Paulsen and Soros have dumped their shares in the US banks. That is yet another sign that the Big Storm is approaching.

China and Russia are not waging war on the US dollar. They are defending their own nations and economies from the gross financial misconduct of the US government and Federal Reserve Bank.

The weakness of the dollar and the insistence by the US that all energy trade must be in the petrodollars is an easy correlation of weak dollar equals high energy prices. That is causing economic harm to the economies of other nations to the point that many are now clearly seeing that the petrodollar supremacy has to end or their peoples and economies continue to suffer.

When other factors are included such as the US does not accurately or honestly state the rate of inflation so they can keep interest rates artificially low, the trend is even more negative. If inflation were to be stated exactly as it is and include those increased cost of living items they conveniently leave out, interest rates would soar and the US government would not even be able to pay the interest expense on the $17.6 trillion National Debt they have heaped on the backs of US citizens.

It goes even further to compound the problems. The ill-advised FATCA law that pretends to hunt US tax evaders by attempting to spy on every foreign financial transaction and bank account will kill foreign investment into the USA. Most nations are not going to comply with this new USA law and they recently delayed its full implementation from July 1, 2014 to January 1, 2016 in the middle of the next Presidential election year.

Just when Americans think it cannot get any worse, and we finally have seen the bottom of the barrel, Washington DC actions assure that Americans are in for a very gloomy financial future. They make sure in DC that the bottom of the barrel is still not reached.

The morons in DC can loan $1 billion to Ukraine, arrange a $15 to $18 billion IMF loan, and spend $5 billion for Regime Change in Ukraine, yet not $1 dollar to fix what is wrong inside of America.

Maybe I am a modern day Will Rogers: