Xmas Rally Has Finished.

[SimpleTrades]

<i>Why is the Euro going down then? What fundamental reason do you think might be the cause of it doing that?</i>

Credibility. Panic. Uncertainty. It is a rush out of the euro into the primary reserve currencies, the USD and the Yen.

 

[bwolinsky]

Quote from bhardy307:

<i>Why is the Euro going down then? What fundamental reason do you think might be the cause of it doing that?</i>

Credibility. Panic. Uncertainty. It is a rush out of the euro into the primary reserve currencies, the USD and the Yen.

I don't think if I was a professor I would have accepted that answer, but since it does get to the heart of the problem that people are "rushing out of the euro" that's right but the more correct answer which makes me even more worried about your portfolio management skills is simply that there is an excess supply of euros.

More precisely the ECB does not have the authority to print money like the Fed had, but they know monetary stimulus will bail out Sovereigns, we took that opportunity from them and now that our dollars are at such elevated levels the Euro will drop, which by our analysis here is more likely if there is further easing or even outright intervention it is the intervention that will be the signal the ECB is aware of the Euro's failure but they shouldn't try to stop it because that plan will fail.

It should be noted that they have Soverign Debt Crises, <b>not private ones, which is over 156 times worse if you ask me. It's not just companies that are failing it is the entire whole of some nations, and that is much more catastrophic and harder to solve than simply keeping a company afloat. There aren't enough Euros out there in the money supply to even backstop Italy, let alone that piigs country Greece. I mean, we're facing State defaults by California but that is not the same problem as having an entire nation's debt markets collapse. The ECB is powerless if you ask me to do anything about it, and I'm concerned the Fed is making a huge mistake to extend its credit lines because that is not going to work and hurt our currency just as well even if it might save theirs.</b>

I will give 3/5th's credit on that. I still don't think you should be managing your own money.

0.7 would have been a passing score.

 

[SimpleTrades]

There is also an overwhelming excess of US dollars. This is a race to the bottom. However, because these currencies float, there is no bottom. They simply cycle back and forth. USD goes down, Euro goes up, Euro goes down, USD goes up.

The effect is likely inflation in both economic regions. This is the preferred option since the alternative is deflation and depression just as happened in the Great Depression when money supply was reduced.

And what does inflation do to the stock markets?

What has increased money supply done to the US stock markets?

 

[bwolinsky]

Quote from bhardy307:

There is also an overwhelming excess of US dollars. This is a race to the bottom. However, because these currencies float, there is no bottom. They simply cycle back and forth. USD goes down, Euro goes up, Euro goes down, USD goes up.

The effect is likely inflation in both economic regions. This is the preferred option since the alternative is deflation and depression just as happened in the Great Depression when money supply was reduced.

Listen to me: you do not understand economics, here is a video that should educate you to some limited extent:

<iframe width="560" height="315" src="http://www.youtube.com/embed/M0Dh4RVPaWc" frameborder="0" allowfullscreen></iframe>

If you believe inflation is ever good, IT'S NOT! This is catacylicism at its less obvious stage but all of the Eurozone will feel for their currencies collapse, and probably ours, but<b> my point </b>is that <b>it will not be good for any financial security.</b>

 

[SimpleTrades]

You keep changing your reply.

 

[bwolinsky]

Quote from bhardy307:

You keep changing your reply.

I know, but you failed the test without identifying the right answer because it was too indirect to qualify, because you will learn something here that inflation and deflation happen at the same time, so please watch the video.

If I don't educate anyone else or make my points clearer rather than Remy's Debt Ceiling Rap I probably should have put this vid in here, but I think you really need to watch this so that you'll know whether the Fed is making legitimately rational decisions that have credibility, because you're right, the ECB may still have some, but not really when it comes to their admittance of a state like Greece who did not qualify under any terms of the treaty but was manipulated by certain countries and allowed in out of accounting and financial forgery when they decided to look the other way and ignore their pacts which has and will and obviously will cost them.

 

[SimpleTrades]

Quote from bwolinsky:

I know, but you failed the test without identifying the right answer because it was too indirect to qualify, because you will learn something here that inflation and deflation happen at the same time, so please watch the video.

If I don't educate anyone else or make my points clearer rather than Remy's Debt Ceiling Rap I probably should have put this vid in here, but I think you really need to watch this so that you'll know whether the Fed is making legitimately rational decisions that have credibility, because you're right, the ECB may still have some, but not really when it comes to their admittance of a state like Greece who did not qualify under any terms of the treaty but was manipulated by certain countries and allowed in out of accounting and financial forgery when they decided to look the other way and ignore their pacts which has and will and obviously will cost them.

Ok, I'll watch it, but I have to ask you something:

Given the nature of floating currencies, where does the money go when it rushes out of the Euro? Is this good for USA to suddenly have much more expensive products making it much more challenging to export. A significant rush back to the US dollar increases the likelyhood of a new recession in the USA. As the credibility of the US economy deteriorates and the stock markets fall, where does the money go?

No major economy wants a currency that is overvalued. They will do everything they can to insure their currency isn't overvalued. They have no choice but to prop up the euro in order to protect their own currency. Otherwise, their own goods become too expensive, and they risk falling into a recession.

 

[bwolinsky]

Quote from bhardy307:

There is also an overwhelming excess of US dollars. This is a race to the bottom. However, because these currencies float, there is no bottom. They simply cycle back and forth. USD goes down, Euro goes up, Euro goes down, USD goes up.

The effect is likely inflation in both economic regions. This is the preferred option since the alternative is deflation and depression just as happened in the Great Depression when money supply was reduced.

And what does inflation do to the stock markets?

What has increased money supply done to the US stock markets?

BTW, access to credit was incorrectly identified as the cause of the Great Depression. It is certainly important but when interest rates were just 4% that wasn't the cause of it at all.

The trade war enacted globally by the Smoot Hawley Tarrif caused the Great Depression and lead to World War II after the rise of Adolf Hitler.

It's unfortunate that the Keynsian viewpoint still reigns to this day but it does not reign true, because it was illogical. The causes were trade imbalances by tarrifs far in excess of what would have been customary, fair, and equitable.

Denial of this fact has really hurt this country, and I hope we can recognize this sooner rather than later because you've proven yet again you don't understand economics, or history.

 

[SimpleTrades]

Quote from bwolinsky:

The trade war enacted globally by the Smoot Hawley Tarrif caused the Great Depression and lead to World War II after the rise of Adolf Hitler.

What caused the trade war? Reduced money supply. Reduced money supply, reduces production. This forces protective measures to insure production occurs only where you want it to occur. Unfortunately, this forces everyone to respond in kind. The result: a worsening world economy and eventually wars.

 

[bwolinsky]

Quote from bhardy307:

What caused the trade war? Reduced money supply. Reduced money supply, reduces production. This forces protective measures to insure production occurs only where you want it to occur. Unfortunately, this forces everyone to respond in kind. The result: a worsening world economy and eventually wars.

No, your history is wrong. Smoot Hawley came first, but the lines are blurred because it came after the crash of 1929, the true demarkation point of the "reduced money supply." It had nothing to do with credit or interest rates, because we'd never seen a crash and depression like that, but economists dismiss my idea because they claim we started to see problems in the credit market.

Nah! You think? When we allow people 30:1 leverage on stocks, and no one really knows how the stock is doing until they get their newspaper or stand by the broker watching a real ticker, then you can come tell me reduced money supplies were the cause, because they were not. No one explicitly reduced the money supply. All of the interest rate hikes came after the crash and during the depression. The interpretation that Smoot Hawley only exaccerbated it is wrong, it caused WWII as well as the Great Depression.