How low can the Federal Reserve allow the U.S. Dollar to decline? Every trader and investors understands the argument that a weak U.S. Dollar will usually boost exports and help to create inflation. However, the negative fact for the world is that the U.S. Dollar is the world’s reserve currency. Therefore, when the U.S. Dollar declines goods for everyone in the world will inflate higher. Has anyone bought a vegetable lately? Produce has skyrocketed from last years prices. Look at the price of gasoline, the average price of gasoline in the United States is now $3.90 a gallon. All of these high prices for food and energy are occurring because of the weak U.S. Dollar Index.
All of the people that are on fixed incomes feel the effects of the weak U.S. Dollar the most. The U.S. Dollar is buying less and less goods for these individuals while there income remains the same. The inflation created from a weak U.S. Dollar is a direct tax for all consumers.
This morning the U.S. Dollar Index is trading higher by 0.47 cents to $75.36. This move higher in the U.S. Dollar Index is causing gold and silver to decline from their morning highs. Many traders and investors have bought gold and silver as an alternative to the U.S. Dollar. Eventually, the controlling powers of the United States will have to try and boost up the U.S. Dollar in order to keep gold and silver from breaking out further and scaring the public that the U.S. Dollar is nearly worthless. We shall see if we are now nearing that time as Standard and Poors has downgraded the outlook for the United States to negative this morning. Please understand that this is just an outlook cut by S&P as the credit rating of the United States is still triple A(AAA) rated.
Nicholas Santiago
InTheMoneyStocks.com