Essay Writing Service It is still amazing at how people get so excited about a stock market rally that occurs when the value of the U.S. Dollar declines. Are people crazy or what? When the U.S. Dollar Index declines the cost of goods that people need to live becomes more expensive, Just look at the price increase in oil since October 4, 2011, on that day oil was trading below $76.00 a barrel. Today the price of WTI oil reached $93.74 a barrel. Heating oil will be needed very soon as winter comes upon us over the next few months. This is just one of the negative factors for the economy when the world’s reserve currency called the U.S. Dollar get devalued and diluted. Just look at how expensive goods became when the Federal Reserve implemented its $600 billion quantitative easing program last year.
Politicians will usually say that they want a strong U.S. Dollar, however, that is not true by their actions. You see, a weak U.S. Dollar creates inflation and keeps up the price of assets. These politicians hope that when a person opens up their 401 k statement they will think they are making money, however, the truth is that the gain in the retirement plan comes at the expense of weaker U.S. Dollar. What good is it for people to have a stronger stock market if the currency that they use buys less or deflates?
Has anyone been to Europe recently? Greece was once a great place to visit when the country used the Greek Drachma. Now that Greece uses the Euro as a currency the country is overpriced. Who would go and visit a place that once cost a fraction of the price to eat, drink, and lodge. Why would anyone want to visit a place that is too expensive? The answer is that people will not go there, tourists will go elsewhere. The same case can be made for other countries including Holland and Italy.
The entire stock market is really just one big trade on the U.S. Dollar Index. If the U.S. Dollar Index can decline then the stock markets around the world will inflate higher. The big question that we all must ask ourselves is how low the U.S. Dollar Index can go before it becomes problematic for the world. Right now the U.S. Dollar Index is being played like a toy yo-yo. The power brokers of the world allow it to inflate a little, however, when the stock market looks as if it will break they simply deflate the dollar again and cause the markets to increase. If you have ever owned a yo-yo toy when you were a child the string that holds the little toy will usually break after a few years. If that happens to the dollar, we better watch out because that would make 2008 will look like a movie trailer of what could take place.
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