Dollar Dollar Bills Ya’ll
Perhaps the dollar is finding its strength in the massive liquidations and margin calls… perhaps market participants think that the numbers coming out of the foreign markets are more bogus than our own… perhaps the markets are pricing in the implicit military threat of not accepting dollars. I’ve heard comparisons of the US to the Wiemar Republic and Zimbabwe… neither had nuclear arsenals or a predilection for preemptive military action for dollar support (Iraq).
Many have predicted the demise of the dollar during the credit crisis, and though the argument appears economically logical, it isn’t happening. There are a multitude of reasons for this phenomena, none of which are important to a trader.
Beliefs about fundamental economic data are a personal bias that allow you to quantify the degree of cognitive dissonance in the believer. If you believe that the USD is a worthless sack of crap, but price action says otherwise, it means that your understanding is not serving the pragmatic rational for developing a thesis; price prediction.
The dollar may fall, it may not, I certainly don’t know what to think. Either way, I don’t have to. There will be a trend created by the price action in various notes on financial exchanges, and that trend will generate wealth.