The Slipping US Dollar – Should We Care?

I am just an entrepreneur, investor and consumer so the US Dollar slide has been ‘beddy beddy’ good to me.

As an entrepreneur, there is massive deflation in startup costs. Let’s just call that one GOOD. Shit…GREAT!

As an investor, the massive printing of money has surely crowded the private equity market of late, but I am a small investor and a rising tide lifts all/most boats. I will call that good (at least for me), but dangerous. I believe it’s dangerous because it is inevitable to make way more of my investment choices expensive. I have too much education for me to be comfortable with that, even as a trend follower. Maybe this time it’s different .

As a US consumer that consumes way too much, it has been SPECTACULICIOUS because I have been fortunate enough to be able to afford the fuel increases, travel and leisure cost increases and food price increases and buy more basic goods at lower prices because of the whole ‘China Thing’. A trip to London would probably change my opinion of what is affordable.

Back to the investor thing…who is making the real MONEY off this trade? Can it and/or will it continue?

Today the Canadian Dollar rose to 92 cents. You Americans could care less. Where the hell is Canada on the map anyways. The trend followers have been printing money. There is money in this trade still. The decline may well accelerate. I posted on the trade in February and it has been a good one. With oil still likely to go much higher, the Canadian dollar should follow suit. A simple view, but one I believe in.

The US Dollar is so weak that even tiny Israel has seen their currency – The Shekel – rise to 15 year highs against the US Dollar. It can’t be oil, Israel is the only country in the region without it. The investor in me considers this a wacky thing considering the daily danger of having most of your neighbors hating you. Seems like the last currency I would want to own on a fundamental basis.

While most of the world’s currency are rising sharply against the US dollar, the Chinese Wan stands relatively still. How? Why? Should we care? The ‘experts’ will tell you we should care. The manipulation is masking the deterioration and stress on the financial system. They say something has to give. I tend to agree with the experts, but when?

My ‘tell’ is oil. As oil prices stay strong, there is mucho stress on the system. The price of oil is priced in US Dollars so we are seing a rise in price for sure, but not nearly what it could be. I still consider it cheap and us lucky so far. The Europeans have had a strong Euro so the big price increase has been in US dollar pricing and their currency appreciation has masked the price increase. I don’t trust that one at all, but a trend is a trend.

In China something has to give. By keeping the Wan closely pegged to the dollar, the rising price of oil will surely work it’s way into higher prices for Chinese goods. So far, the ‘forces’ have kept this one at bay.

Time will tell if this can continue.