True story. Everyone’s racing to the bottom in this fiat money debasement contest.

There are no good currency alternatives because the rest of the world are worse basket cases than the U.S… only real sound alternative is Gold… that is until the Central Planners decide to make it illegal to own it like they did during the Depression. Majority of world goverments and central banks have a vested interest in keeping the U.S. Dollar as reserve currency, so as long as they all “conspire” to keep the game going then we should just accept it the funny money binge and “party like it’s 1999″ … gotta make hay while the sun shines, and we or our children/grandchildren will have to deal with the mess we’ve made later on down the road. I certainly don’t condone this insane goverment policy, but I have to trade what “is” and not what I wish and hope for…

Yes, and it will remain the world’s reserve currency as long as people have confidence that it will retain value better than alternatives. The dollar is not history’s first reserve currency, and it is unlikely to be the last.

There is a big difference between Zimbabwe and the United States. The Zimbabwe Dollar is not the world’s reserve currency. That is a very important distinction…

Gideon Gono knows what happens when you print dollars as fast as you can over a long period. definitely one of my fav commentators on the financial cris this year.

Of course they’ve stopped using zimbabwean dollars now. I think the presses broke or something.

This is an example why Chris really needs to have a forum on the pay site. I’m not at all sure what happens, and don’t even know if the Fed can actually “print” an infinite amount of dollars. “The fastest way to run out of money is to print more of it”.

On the other hand I recall Frank Capiello on WSW back in 1981 or so mentioning that in the 1923 German inflation stocks held value because they represented tangible assets in the form of factories etc. I’m not so sure how well that analogy applies to American corporations nowadays, but is worth a thought.

Lastly I don’t mean to be so USA-centric in my posts but at the moment the first world is still looking to the U.S. for leadership. Maybe not for much longer but today I trade U.S. markets.

In the long term, we are all definitely dead. lol.

One other thing to remember is at the time that Henry Morganthau spoke in 1939, there had just been a bull market 1933-7 & then another bear market 1937 to date.

Roosevelt came to power later in that cycle though, and by his inauguration the market had already fallen 89% to the bottom. Massive spending can only create the illusion of prosperity, not the actuality, and for only as long as people are fooled. That won’t be more than a few months here.

On the subject of whether or not the government can spend it’s way out of the problem the long-run answer is no, but as Keynes said “in the long-run we’re all dead”… so what we need to be concerned with as traders is what all this massive unprecedented funny money pumping is going to do to stock in the “short-run”… and in that regard the way I think about it is not withstanding IPO’s and secondaries there is a finite amount of stock shares and those shares are priced in dollars. So what happens to stock prices (and other asset prices) in the short run when the Fed can and does print an infinite amount of dollars out of thin air in the click of a keystroke???…

Humility as a trader is essential. I absolutely agree. Anyone who trades on faith will probably end up as roadkill in this market. You were right about this bear wedge being a bear trap too & I completely respect that.
Like you I have been surprised by the number of diehard bears in the blogosphere though. Too many. When this bear market ends, I will cheerfully become a bull. Much easier to make money in a bull market.
There’s nothing wrong with looking at the big picture though. I was short last September because the economy was clearly heading into the crapper and the market had to be following it down. Notwithstanding a lot of insane government spending, the economy is clearly very far from recovery, and the market cannot prosper for long until the economy improves sustainably.
In the short term though, subject to swine flu, the bulls look solid, and unless the lower line on that channel is penetrated, I will respect that & trade accordingly.
Good quote from Zero Hedge tonight – No less an authority than FDR’s Treasury secretary and close friend, Henry Morganthau, said in 1939: “We have tried spending money. We are spending more than we have ever spent before and it does not work…..I say after eight years of this Administration we have just as much unemployment as when we started, and an enormous debt to boot!” Similarly policy makers’ current aggressive actions remind me of the quote “Never in the history of the world has there been a situation so bad that the government can’t make it worse”.