The New Myth of Myths

The chart is the dollar in blue vs crude oil in green going way back to '94. You will see that the downtrend in the dollar started '02 and it perfectly coincides with the rise in crude prices. The prior rise in the dollar started in '95 and ran to'02. This crude dollar relationship has now become law (don't check Snopes on this), one that everyone is talking about and seems determined to obey. Back when Ruben was running Treasury in '95 he recognized the need for a strong dollar, so he stampeded the shorts by causing some of the big banks and brokerages to go long huge numbers of contracts thus causing huge losses to the big specs who were short (a short "squeeze"). It is against the law for the government to directly buy or sell futures but the Fed Chair plus the Treasury Secretary can do stuff that forces big interests to act. This is probably happening right now through the T-Bond markets, crude markets, or dollar markets. We will not be able to detect this "intervention" but the mere fact that there is the "conversation" will be enough to force the dollar shorts to cover. Since all the major players, especially including the Saudis, want lower prices you can count on the fact that they will be coming down. Where have they been? Well Bernanke and Paulson had the credit crises to worry about as job one, and a complex intervention of this kind requires strong banks. Note that the dollar trend is a long one as most currency trends are. This could be very big.

Next: fighting inflation (by raising rates) and addressing the housing disaster that requires dropping rates. One would think treasury and Fed would be on the same page on this one and let us know which they intend to address. Do they know? Has anyone calculated the disaster of a million default on the books of the banks? A complete evaporation of credit? Obama is going to win via default. Well, at least he'll keep the fucking Jews out of the banking business.