The Rise of the Dollar

Why is the value of the Dollar Rising?

The Dollar has risen recently on the supposed strength of the economy and Fed announcements that it may soon raise interest rates. Will this strength last?

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Podcast Summary:

0:00 – 3:26 Introduction

Alternative Media Echoes Mainstream Media

3:26-4:40 Discussion of the alternative media’s coverage of main stream media news stories. The stories still mostly originate with the main stream media, while the alternative media comments on them. This reinforces the mainstream media’s narrative.

The Rise of the Dollar

4:40-6:10 The renewed confidence in the dollar resulting in a much stronger dollar and its impact is discussed.

The dollar is being rewarded because the Fed is not doing what they are not supposed to be doing i.e. quantitative easing. The Fed is closing down this round of quantitative easing and threatening to abandon its zero interest rate policy by raising rates.

The Fed, thus appears to be a prudent steward of the dollar – after six years of zero interest rates and $4 trillion of money printing, all is forgotten!

What if?

If the Fed had announced in 2009 that they were going to pursue a policy of printing $4 trillion over the next six year and keeping interest rates at zero, the dollar would have collapsed. Yet that is what they did and the dollar is stronger now than in 2009!

Russia Threatens to Abandon the Dollar in Two- Three Years

6:10-10:52 Discussion of Andrey Kostin’s, head of Russia’s second-biggest bank VTB, comments that two to three years would be enough time for Russia to switch to international settlements to the ruble.

While there is confidence in the dollar, there is little confidence of consumers that the economy is getting better.

Indeed, the U.S. middle class is poorer today than in 1989!

Central banks around the world are not doing well.

The Public Has a Positive Impression of Banks – Gallup Poll

Yet, despite Argentina’s woes, Portuguese and Bulgarian bank failures, massive money printing by central banks in Japan, Europe and the United States and large bank libor rigging scandals, according to a Gallop poll, the U.S. public now has a positive impression of banks!

The public is deceived into thinking that the central bank policies have worked.

Fear mongering helps gain credibility for “official” stories.

Student Loan Forgiveness Program

10:52 -16:15 The new proposed student loan forgiveness program (Senate Bill #2726) whereby if graduates work for the government for ten years after graduation their student loans will be forgiven. The down sides to this program are discussed. Under the program college would remain expensive and the students would have to pay tax on the amount of “income” of their loan forgiveness and they don’t add anything to the economy.

This program tacitly admits that a college degree is not worth it but that the government will provide the benefit of letting you go and overpaying provided you work for the government and pay taxes on your income from the loan forgiveness.

Education should be market driven to improve quality and lower cost.

The housing market is going nowhere despite artifically low interest rates because the labor market is weak.

The Fed Gearing Up for More QE

16:15 – 17:30 the Fed has started down a path that they cant reverse. So they only pause then head back in the same direction. The Fed is threatening to unwind their balance sheet by the end of the decade. This will never happen. If the dollar soars because the perception is falsely held that the Fed is going to raise rates, the economy will enter a deflationary depression- something the Fed would never allow as they would always print currency to combat it.

Greenspan on Gold in Foreign Affairs


Alan Greenspan, former Chairman of the Federal Reserve recently said investing in U.S. Treasuries is safe, not because the US economy is strong, but because the U.S. can always print money to pay principal and interest.

Last week Alan Greenspan published an article on gold praising its place in the monetary system.

Greenspan wrote:

“Yet gold has special properties that no other currency, with the possible exception of silver, can claim. For more than two millennia, gold has had virtually unquestioned acceptance as payment. It has never required the credit guarantee of a third party. No questions are raised when gold or direct claims to gold are offered in payment of an obligation; it was the only form of payment, for example, that exporters to Germany would accept as World War II was drawing to a close. Today, the acceptance of fiat money — currency not backed by an asset of intrinsic value — rests on the credit guarantee of sovereign nations endowed with effective taxing power, a guarantee that in crisis conditions has not always matched the universal acceptability of gold.”

Gold and Silver

Gold and silver have been going down and the media has been trashing gold.

Manipulation or not, the low prices have driven gold and silver sales higher.

The U.S. Mint reports a surge in silver and gold sales in September and early October.

The U.S.Mint reported selling 4.1 million American Silver Eagles in September, up from 2 million in August.

The U.S. Mint also sold 50,000 American Gold Eagles on September up from 21,000 in August.

Australia’s Perth mint a smaller mint than the U.S. Mint sold even more gold in September than the US mint selling 68,0000 ounces vs 36,000 in August.

The price of gold and silver is discussed as is manipulation of precious metals.

How the Fed Encourages US Banks to Keep Excess Reserves in U.S.

22:24 -23:50

Discussion of the various market manipulations of the Fed and central banks.

Foreign banks are keeping excess reserves by at the Fed.

QE 3 and the Prices of Gold and Silver

23:50-25:50 discussion how QE3 no longer had a positive impact on the price of gold and silver and how the prices of gold and silver dropped during QE3. Now that the Fed is ending QE gold and silver are heading down and the dollar is going up. We noted in 2013 that the QE trade for gold and silver ended even though QE 3 was the largest dollar printing campaign of them all.

Discussion of stock market valuations.

News Corp Buys

Do online real estate portals make money?

25:50 Discussion of online real estate and the acquisition of by News Corp for $950 million in cash.

Discussion of the structure of the online real estate market and why none of the companies engaged in it have ever shown a meaningful and lasting profit.

The best way to make money today is by losing money by growing revenues and going public.

Real estate agents are not a popular draw on real estate sites, yet real estate portals make their money selling ads to real estate agents.

The Rise of the Dollar

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Further Reading:

How to Buy Gold

How to Buy Silver

Sales of Gold and Silver at the US Mint in September 2014

The QE Gold and Silver Trade is Over

The Dark Side of Artificially Low Interest Rates

Foreign Banks Keep Excess Reserves at the Fed

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