Hi all,
I've just received "Tharp's Thoughts Weekly Newsletter" (free and public so reproducing an excerpt here should not be a problem) with some interesting comments on the Dollar.
Here's what he has to say:
Tracking the Dollar.
Before I get into a discussion of the dollar, I want to look at U.S. debt and repeat a little of what I said two months ago. The debt has now passed $8 trillion. In Safe Strategies for Financial Freedom, I showed the government statistics which included future obligations, giving us a debt of $31 trillion. Well, in February of 2005, Professor Kent Smetters during a congressional testimony said that our off budget debt was now $65 trillion. We’re now approaching a future debt by our government of about $700,000 per household. Is your family’s net worth over $700,000?
What does this mean? Well, our economy is growing at about 3-4% per year. Our debt is growing at between 7-8% per year. This basically means that the dollar will eventually collapse or be inflated out of existence.
Look at the next table showing the dollar index over the past year.
The Dollar Index
Month
Dollar Index
Jan 0581.06
Feb 0581.81
Mar 0580.89
Apr 0582.23
May 0583.34
June 0584.95
July 0585.79
Aug 0584.26
Sep 0583.68
Oct 0585.25
Nov 0586.69
Dec 0585.79
The dollar is now much higher than it was at the start of the year. This is because U.S. interest rates are starting to get higher and money is attracted to currencies with high interest rates. However, don’t expect too many more increases from the Federal Reserve or we will see a big time housing and stock market collapse.
What this all means.
Notice that gold has been going up (15% since May) while the dollar has been rising since March. This is certainly an interesting picture that suggests inflation.
Our big picture still suggests a long-term BEAR market. The secular bear began in 2000, but conditions are ripe for one to start even at current levels. Plus debt continues to grow faster than the economy. So something must happen to correct it all. However, who knows when that will happen. This is not about prediction, it’s about looking at conditions influencing the economy and seeing what happens. There will always be good ways to make money if you are willing to work on yourself to get past your fear, greed, and other emotions to just see what is going on in front of you. So let’s continue to watch the market for more signs. Until the end of January update on the market…this is Van Tharp.
I've just received "Tharp's Thoughts Weekly Newsletter" (free and public so reproducing an excerpt here should not be a problem) with some interesting comments on the Dollar.
Here's what he has to say:
Tracking the Dollar.
Before I get into a discussion of the dollar, I want to look at U.S. debt and repeat a little of what I said two months ago. The debt has now passed $8 trillion. In Safe Strategies for Financial Freedom, I showed the government statistics which included future obligations, giving us a debt of $31 trillion. Well, in February of 2005, Professor Kent Smetters during a congressional testimony said that our off budget debt was now $65 trillion. We’re now approaching a future debt by our government of about $700,000 per household. Is your family’s net worth over $700,000?
What does this mean? Well, our economy is growing at about 3-4% per year. Our debt is growing at between 7-8% per year. This basically means that the dollar will eventually collapse or be inflated out of existence.
Look at the next table showing the dollar index over the past year.
The Dollar Index
Month
Dollar Index
Jan 0581.06
Feb 0581.81
Mar 0580.89
Apr 0582.23
May 0583.34
June 0584.95
July 0585.79
Aug 0584.26
Sep 0583.68
Oct 0585.25
Nov 0586.69
Dec 0585.79
The dollar is now much higher than it was at the start of the year. This is because U.S. interest rates are starting to get higher and money is attracted to currencies with high interest rates. However, don’t expect too many more increases from the Federal Reserve or we will see a big time housing and stock market collapse.
What this all means.
Notice that gold has been going up (15% since May) while the dollar has been rising since March. This is certainly an interesting picture that suggests inflation.
Our big picture still suggests a long-term BEAR market. The secular bear began in 2000, but conditions are ripe for one to start even at current levels. Plus debt continues to grow faster than the economy. So something must happen to correct it all. However, who knows when that will happen. This is not about prediction, it’s about looking at conditions influencing the economy and seeing what happens. There will always be good ways to make money if you are willing to work on yourself to get past your fear, greed, and other emotions to just see what is going on in front of you. So let’s continue to watch the market for more signs. Until the end of January update on the market…this is Van Tharp.
I got a tenor Selmer that I drag around town to the odd gig here and there whenever the mood and opportunity arises. 