U.S. Dollar Only Down 2 Percent for the Year. Since the Crisis Started in August of 2007, the U.S. Dollar is Unchanged. Yet the Dollar is Down 33 Percent Since the Start of the Decade. The Currency Race to the Bottom.
People have a hard time grasping that given the tumultuous market of 2009 and all the liquidity being funneled into the market by the U.S. Treasury and Federal Reserve, that the U.S. Dollar has only fallen 2 percent for the year. What is even more surprising to many is the U.S. Dollar has remained unchanged since the crisis started in August of 2007. How can that be you say? The U.S. Treasury and Federal Reserve have bailed out Wall Street and banks with commitments and direct credit injections to the tune of $13 trillion yet the dollar remains unchanged. Let us first look at a graph to show this:
U.S. Treasury and Federal Reserve. Federal Reserve holding over $2 trillion in the Darkest Balance Sheet in Financial History.
The U.S. Treasury and the Federal Reserve have arguably two of the least transparent balance sheets known to humankind. This wouldn’t be such a big issue if the amount of money funneled into these organizations was small. That is not the case. The Federal Reserve since October of 2008 has held on its balance sheet over $2 trillion in reserve bank credit and also, Federal Reserve Holdings of U.S. Treasuries. This of course is the biggest bait and switch in history because in exchange for U.S. Treasuries, banks can offload practically any collateral (i.e., mortgages, auto loans, credit card loans, etc). The U.S. Treasury and Federal Reserve are creating the biggest put option in the history of the world and the American taxpayer stands to lose big.
Alan Greenspan on $100,000 White-collar Comedy Tour: Quantitative Easing and Changing our Economic and Financial Language.
Alan Greenspan continues his White-collar $100,000 speaking fee comedy tour in which he tells the audience that he had nothing to do with the housing bubble. Those expecting to see a mea culpa concert from the former Fed Chairman are going to be waiting for a very long time. According to the majestic maestro, a low interest rate environment has nothing to do with encouraging people to borrow. This line of thinking from the U.S. Treasury and Federal Reserve is precisely the reason we created an ecology that was conducive to planting and growing excessive debt.
State Unemployment Data: 7 States Now With Historical High Unemployment Rate. Michigan 22.8 Percent Unemployment Rate (U-6) with Official Government Data.
There have been many comparisons to the past with our current recession. For the most part, people are trying to find something familiar so they can have a better sense of where we are heading. The only problem is that there isn’t much in our own history to guide us forward. This is a unique and deep recession unlike anything we have seen since World War II. When I put together a post highlighting that 24,700,000 Americans are unemployed or underemployed some people questioned the actual number. The only issue is that this number is from official government data which if we look at the stress tests, tend to be conservative.