Attempts to rescue the $ temporarily.

Shadowy forces can manipulate markets. The latest finaglings come to light from the writings of Philip Davis in Seeking Alpha dated yesterday, Nov 7, 2009).

The Obama regime has a dilemma: it wants to control the economy (follow the German model of the 1930s), which requires the printing of enormous sums of money. Deficit is exploding and now accounts for about 40% of the budget. This is the magic number for hyperinflation. And here is the dilemma: if the regime does what is appropriate to stop inflation (raise interes rates which would stabilize the dollar), it will crash the Stock Market and put the economy in another tailspin. Considering what happened in New Jersey and Virginia, the regime is afraid to follow this path. On the other hand, if it continues on the same path, we will see a further drop in the value of the dollar and skyrocketing of gold prices. That's the dilemma.

That is why an effort is under way to rescue the dollar. Mr Davis reports a very large increase in the November and December volume of call options in UUP, the dollar index. These options are contracts to buy dollars at a certain value. Such an option is far cheaper than to buy a bundle of currency, but its effect is AS IF SOMEONE ACTUALLY BOUGHT THE CURRENCY. Of course, if the dollar continues to plunge, the institutions buying the contracts can lose all what they paid for the option, but they could produce a temporary rally in the dollar

and repress commodity prices, including the price of gold. Gold prices briefly hit $1,100 on Friday and may yet hit my forecast of 1120 this week before retreating below 1100. Just who is buying the dollar options is immaterial, but it is most likely financed by the FED. Here are some numbers and I got them from the graph. The volume of UUP this last week was about 30 Million (Davis reports that millions of shares had to be authorized) and the striking price is 23. If I read this right, each share represents a bundle of dollars for a price of $23. Thus, a speculator (or a government shill in a bank) can buy a contract on a bundle of dollar bills for a price indicated on the graph. This manuver would act to stabilize the value of the dollar. If foreign banks fall for the trick, they will stop selling their dollars, thinking that the drop in the dollar has stopped. This solution is temporary. The contracts expire in November and December and the shills will have to buy new ones. The cost? For thirty million shares of UUP at the price indicated on the graph, it would be 690 million dollars. Considering how much currency this regime has printed, it is chicken feed.

Will this scam work? Hard to tell now. In the long run, NO! In the short run, it might. The Obama regime got a pale of cold water in its face with the double digit unemployement figures. With the threat of inflation AND UNEMPLOYEMENT rising, 2010 will be a tough year on Democrats come election time in 2010. With the threat of Cap and Tax loomimg and the socialized health care, we might even have a Revolution.