Dollar hits 1066/oz!!

It is true that sometimes the right hand does not know what the left hand is doing. Today's Daily Wealth brings a notice from Tom Dyson, advocating of buying into the dollar ETF. Mr Dyson reasons in a Contrarien view as this: the dollar is losing value, because our interest rates are too low. So, other currencies appreciate and gold soars. He predicts that the FED will raise interest rates at some point and then the dollar will rally ten percent and gold will retreat. In fact, Australia has raised interest rates and Canada, New Zealand, S Korea and Norway are contemplating the same.

Others, myself included, disagree. There are ample reasons from Bernanke's point of view to keep interest rates very low. First, there are technical reasons. Letting the banks borrow at a 0.5% rate and then they charge 4.5 -6.5 percent, in fact recapitalizes the banks and rewards Buffet (an Obama supporter with lots of shares into banks especially Wells Fargo). Second, Bernanke believes that the Depression continued because the FED raised interest rates too soon. The third technical reason is that unemployment is still rising and the coming defaults in commercial real estate will continue to deflate the economy.

Then there are political reasons. The radicals in charge of our country want to downsize our economy, and in their view, return the money to its rightful owners. The Sep 15 change in accounting system (move to mark to market) destroyed a very sizable share of America's wealth. It downsized America. The Left in Congress will argue that we can no longer afford to continue the war against terrorism or even maintain a superior fighting force. A reduction in the value of the dollar will allow people from other countries to acquire our assets cheaply. This is stillw ithin the desirable changes the Obamabots seek. Finally, low interest rates help to reduce the deficits temporarily, so the Obamabots can continue to "help" the people they make jobless and miserable. This regime is tied to the Munchausen by proxy form of mental illness.