The USD is falling quite significantly because of the coming QE2 and this has caused the stock markets around the world has up sharply in a very short period of time although the economy is still not good. Do you guys worry the stock market is another boom and bust scenario very soon or the liquidity will push up the market to new high next year?

i need to think about my investments given the returns on saving is so low and inflation is coming already but stock market seems too volatile now.

What do you mean by QE2? You are not referring to the passenger liner?

[ Last edited by  geoduck at 12-10-2010 02:32 ]

I am holding my cash until after the QE2. I expect the market to sell off then come back strong nov/dec through April.

LOL passenger liner!

Anyway, QE2 also means the second round of 'quantative easing' by the US government. The first round of quantitative easing was the Fed's unprecedented purchase of agency debt to prop up the housing market, along with credit facilities for big banks, which began in 2008 and ended earlier this year.

In response to harolda, the problem is the HKD is pegged to the USD so any investments linked with the HKD will be low interest. You'll have to look elsewhere like Australia. The AUD to USD is now 1:0.98! Some people have been saying it'll go past the USD towards 1:1.20, but I'm not that optimistic.

well, it's also earnings season coming out so this should be a good indicator to whether the QE2 you are referring to will come in to effect. nevertheless, it is helping the markets all over because they are looking to do more to continue the stimulus on a slowing global economy.

logical seems yes but i have a feeling that the market has already moved far tooo much before QE2, so i have a feeling that it will correct soon if the size is smaller than people's expectations.

Hope the market will not end with tears few years later.....

No one can rationally explain the stock market.  The last 10 years of gains were erased in a couple of days.  What and whether it will go up is a gamble. This is what everyone knows but noone will admit.  It really is best left for the professionals to trade. It is not an individual investor place to place cash and "hope" it goes up.  People are figuring this out and the retail investor has taken to the sidelines.  Often when it goes up the idea is to get people comfortable that it is "safe now". Then the professionals sell it off. Like 7 out in a casino.

well... unlucky for the USD... but lucky for the other currencies!!! im going to go on a holiday next week... and it seems as though my money is skyrocketed!! which means wgs are going to be cheaper and as well as food and accomodation!!! hopefully this is a sign that it will be even more volitle... which would be good for non americans and bad for americans...

actually i think the USD has already too oversold in short term, so i do expect a bounce - just like euro few months ago - it bounced from 1.1 to 1.4 more or less now.

Quantitive easing is the euphamism for Zimbabwean money printing...Its the opening shots of a trade currency war.

It never works and has never worked Japan printed an insane amount of money in the 1990s. They got away with it (inflation wise) because ofm the carry trade and they exported all of their inflation. It won't work because printing money does not create oil or commodities.

In effect the USA is defaulting against its debts by diluting the money supply. They are also stealing from the Chinese people. China holds 858bn of US dollars. When the USA prints money it dilutes the purchasing power of the dollars China holds.Its like lending a mate $100 and only getting back $80.

A year or so back the devaluation was so massive that in effect China lost so much value on their dollars held that in effect the USA with the purchasing power could build their entire pacific fleet twice! Air craft carriers, AEGIS cruisers even the fleet air arm.

Last year China held close to 900bn of US dollars.

Which means China is openly dumping US$ problem is 858bn goes a hell of a long way! The game is on!

If china dumps most of its US$ the USA turns into Zimbabwe and goes hyperinflation (note the USA is already hyperinflating its money supply) Only China is preventing this holding onto USD.

If the USA prints before China can dump China is the loser.

The thing is China says it has 858bn on its books but they may already have dumped it!

That's one of the big reasons China is buying up resources around the world they want some tangible assets for they're U.S. dollars not just devaluating paper. That and the need to insure the chain of supply.

I think you are being a bit paranoid here.

The US is not defaulting on its debts by printing US bills.  Since the debt or reserves are US dollar denominated, this means, by definition, the US cannot default.

Manipulating the money supply is a legitimate and essential part of modern day economics.  

While I will not go so far as to say that I agree with the US policies regarding the economic crisis, it also isn't as black as the picture you are painting.

The chance that China will dump their US dollar reserves in a major way is practically nil.  To do so would be to undermine their own foreign currency reserves and balance sheet, and you have to think about how they got all that money in the first place, ie, running a huge trade surplus with the US.

It's much more complicated than what you are trying to portray.

And your understanding of the Japan situation in the 1990s is completely incorrect.  You might want to find a better source than blogs on the Internet.

At the end of the day the currency situation is also irrational.  It has been so for years. Again the loser is the ordinary person.  Ups and downs in currency are nothing but ways for professionals to make money trading it.  Euro yen dollar yuan it all has to do with a short term view of a trader making money today.  With all the regulation in this world you would think that governments would figure out how to regulate for the economic betterment of all.  Rather than the gain of a few. Currency is more driven by the carry trade than anything else. If you can borrow usd cheap and invest in euro for a higher rate you do so.  Simple.  Dollar goes down euro goes up.  Is this how currency value should work?

I am surprised no one has thrown in Gold to the mix of the conversation, with all the talk of a falling USD, this would only push up Gold prices.

although - this would work contrary to China who has lots of gold and US treasuries... seems like they have hedged themselves haha

ie. low USD value = increase Gold prices
lower gold prices = increase USD value

I thought overall, the USA wants a lower dollar. The USA wants its products to be cheaper and more affordable worldwide. It will allow other nations to buy more USA products. Hopefully, it will bring the USA out of its recession.

For lower the USD means increase in gold prices in a NOT correct.  In times of turmoil and unknown economic conditions, precious metalsl are used for a safe haven for money.

If you look at history, when the USA went to war, or about to go the war, gold gets more expensive but it's not always the case. The last time gold was high was 1980 when the USA was thinking about going to war with Iran. It was over 800 USD an oz. Then dropped to around 325 for a 30 years.

[ Last edited by  Weelock at 13-10-2010 17:26 ]

in fact, there is not too much the USA made products to exports nowadays, so there is not much real good benefits by the US to depreciate their currency except to decrease the real value of the debt. but it is a dangerous way to do it because once if more countries dont trust the USD or the USD is getting less popular, than the chance of hyper inflation in the US would happen. this is why so many countries complain about the USD now.

I don't get my info from blogs, I used to work in the actuaries industry. I used to predict pensions.

Manipulating the money supply is a legitimate and essential part of modern day economics.  



Modern day economics is also known as fraud. Since 1694 economics and central banking has essentially been fraud. This is why the forefathers of the USA resisted the lure of central banking for a very long time leading to a free banking period.

Central banking and currency manipulation have caused incredible malinvestment for over 100 years!

Technically the USA and countries with their own currency cannot default..... but printing is in effect partial default. They owe so much money to China and other nations that they can never ever pay off this debt. Therefore they dilute the money supply by printing. So China still holds 858bn dollars except the purchasing power of it has diminished. China's balance sheet on US$ fell for the first time in decades last year.

Don't look at paper gold, look at real gold, paper gold is a scam much like central banking.

It is only when everybody tries to change their paper gold to real gold that it becomes apparent it is a scam...

The USA doesn't have ANY gold either! The US balance sheet says 8,133.5 tons of gold, the problem is nobody has actually seen it since the 1960s. KPMG was asked to audit the gold reserves in 2005. Problem is they didn't actually see any gold at all! The US has just been saying we have it...

trust me.... one day Ron Paul will get his way and have Fort Knox opened to scrutiny and it will be empty bar an IOU note!

Given the nature of your replies I know there is little point to argue further on the matter, you've got your mind made up.

Very few finance professionals share your opinion, but I think you would have a fan in Mel Gibson or Tom Cruise.  However, you've got a right to your own opinion.

I should point out that the amount of US debt held by the Chinese, while significant, is not exactly something that can turn the USA into Zimbabwe, or anything even close to hyperinflation.  More USD is traded on the world markets per day than is held by the Chinese, by comparison.

Lastly, do you realize that your statement on gold reserves is irrelevant to the world economy.  Even at the stated-odd 8,133 tons of Gold, that would only be about 260M troy ounces or about about 310 Billion USD.  Not exactly conspiracy theory worthy.  Fort Knox isnt even the primary US depository for gold anymore, though I get your attempted point.

That said, you are entitled to your gloom and doom, conspiracy theories.  Have fun in 2012.

Main stream economists don't toe my line because it is something they don't want to hear, Liam Halligan or Faisal Islam both UK journalists have been toeing my line. Bankers, government and many finance professionals have vested interests.

Bankers continue to steal and malinvest making imaginary money.

Government can steal via inflation, and it keeps its efficient fiat system. Also telling the truth. i.e. we are totally fucked does not win many votes.



The issue boils down to one thing faith!


***I should point out that the amount of US debt held by the Chinese, while significant, is not exactly something that can turn the USA into Zimbabwe, or anything even close to hyperinflation.  More USD is traded on the world markets per day than is held by the Chinese, by comparison.********

Which is precisely the point. My issue is not that China can dump the US$ and turn the US into Zimbabwe tomorrow. My point is simple terms Fiat currency. Which relies on force or faith. Once you lose the ability to force people to use your currency. (Weimar, Zimbabwe, Zugoslavia, Latin America loads of times Russia in the 1990s) and or they lose faith. Then the velocity function of the money goes crazy as people seek to dump it before it loses value. Since there are more dollars in the world than the US economy can absorb via productivity, this is very bad.

Printing causes people to lose faith, i.e. I lend you $100, I get $105 back in a few months, sure nominally it will be 'more' but if with this $105 I can only buy $90 because of the fall of purchasing power then my faith drops a bit. Printing money dillutes existing money supply therefore all of those dollars in circulation lose purchasing power.



Call it a conspiracy all you want, but the inflation in the UK where money printing occured is highly visible. Should see the price of gas here,

Saying currency manipulation and printing is a good thing merely causes mass malinvestment and causes moral hazard issues. Bankers fuck up, they get money from the government, so where is the incentive not to fuck up?


I would add money printing is inherently unstable, it isn't like print X and you get hyperinflation and print Y and you don't get hyperinflation. People being finicky can gain or lose faith at any time they want. Every case of hyperinflation in history has been incredibly fast as the faith has been lost as people clamour to change money into real tangible assets.

[ Last edited by  Kennichi at 13-10-2010 21:02 ]