AU$/US$ exchange rate back above $0.95c

http://au.finance.yahoo.com/echarts?s=AUDUSD%3DX#symbol=;range=my;compare=;indic...

For those who say it's too high, please remember that the OZ$ hit $0.97 in 2008, before the US$ hit back during the GFC, to go as low as $0.62, due to its "Global Safe Currency reputation", before the little OZ$ regained favor & rose to $1.10 in 2011.

It should be noted, that the rise in the OZ$ against the US$ & other currencies, over time, has largely been due to the Australian Economy performing better & the OZ Debt levels staying much lower than most other countries, including the US & most of Europe.

perceptions_now wrote on Oct 16^th, 2013 at 9:05am:



Personally, I think they will make an eleventh hour deal, they're working up to it as we speak.  Obama won't be game to end the charade. They will continue to kick the can down the street knowing that D day is fast approaching.

How high can the debt ceiling can go? $50 trillion? $500trillion? limitless?

Who knows how high they will push it, but one thing we know for sure is that it's unsustainable, the crash will come eventually, either now or in the near future, but I doubt they can keep adding to the debt at the current rate for five more years.

They should have taken the fall in 2008 instead of giving bail outs and taking all the subsequent band aid measures of the last five years, it's so much worse now.

Interesting days.

Watch the debt.

I think the USD is weakening,  more than the AUD strengthening.



OC

Table test 

Country	Tax burden % GDP	Govt. expend. % GDP
Albania	24.3	32.3
Algeria	8.0	35.4
Angola	6.1	41.6
Argentina	26.1	24.7
Armenia	16.8	21.8

I thought there might be an easy way to convert html to ubbc.  It's not that simple.

The Fed Can Only Fail

The basic predicament we are in, is that the current crop of leaders in the halls of monetary and political power do not appear to understand the dimensions of our situation.

The mind-boggling part about all this is that it's not really all that hard to grasp.

Our collective predicament is simply this: Nothing can grow forever.

Sooner or later, everything must cease growing, or it will exhaust its environs and thereby destroy itself.

The Fed is busy doing everything in its considerable power to get credit (that is, debt) growing again so that we can get back to what it considers to be "normal."

But the problem is - or the predicament, I should more accurately say - is that the recent past was not normal. You've probably all seen this next chart. It shows total debt in the U.S. as a percent of GDP:



Somewhere right around 1980, things really changed, and debt began climbing far faster than GDP. And that, right there, is the long and the short of why any attempt to continue the behavior that got us to this point is certain to fail.

It is simply not possible to grow your debts faster than your income forever. However, that's been the practice since 1980, and every current politician and Federal Reserve official developed their opinions about 'how the world works' during the 33-year period between 1980 and 2013.

Put bluntly, they want to get us back on that same track, and as soon as possible. The reason? Because every major power center, be that in D.C. or on Wall Street, tuned their thinking, systems, and sense of entitlement during that period. And, frankly, a huge number of financial firms and political careers will melt away if/when that credit expansion finally stops.

And stop it will; that's just a mathematical certainty.

It's now extremely doubtful that the Fed or D.C. will willingly cease the current Herculean efforts towards reviving this flawed practice of borrowing too much, too fast. So we have to expect that it will be some form of financial accident that finally breaks the stranglehold of failed thinking that infects current leadership.

Let's start in 1980, when credit growth really took off. This period also happens to be the happy time that the Fed is trying to (desperately) recreate.

Between 1980 and 2013, total credit grew by an astonishing 8% per year, compounded. I say 'astonishing' because anything growing by 8% per year will fully double every 9 years.

So let's run the math experiment as ask what will happen if the Fed is successful and total credit grows for the next 30 years at exactly the same rate it did over the prior 30. That's all. Nothing fancy, simply the same rate of growth that everybody got accustomed to while they were figuring out 'how the world works.'

What happens to the current $57 trillion in TCMD as it advances by 8% per year for 30 years? It mushrooms into a silly number: $573 trillion. That is, an 8% growth paradigm gives us a tenfold increase in total credit in just thirty years:


For perspective, the GDP of the entire globe was just $85 trillion in 2012.

When I run these numbers, I am entirely confident that the rate of growth in debt between 1980 and 2013 will not be recreated between 2013 and 2043. With just one caveat: I've been assuming that dollars remain valuable. If dollars were to lose 90% or more of their value (say, perhaps due to our central bank creating too many of them?), then it's entirely possible to achieve any sorts of fantastical numbers one wishes to see.

Think it could never happen?


For the Fed to achieve anything even close to the historical rate of credit growth, the dollar will have to lose a lot of value.

Link -
http://seekingalpha.com/article/1774432-the-fed-can-only-fail?source=email_macro...
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Read my lips, the old status quo, can no longer be and whatever Politicians may promise, they will usually be speaking out of their ASS!!!

Thoughts Concerning The U.S. Dollar

One of my ongoing concerns is the future strength, or lack thereof, of the U.S. Dollar. As I am gravely concerned over the future level of the U.S. Dollar and the implications of such, I have written extensively on the subject of the U.S. Dollar and its vulnerability to substantial decline.

In this post, I would like to highlight and summarize various fundamental issues concerning the U.S. Dollar. (For those interested, every month I have been posting long-term U.S. Dollar charts, including notable technical demarcations.)

For reference purposes, here is a monthly chart of the U.S. Dollar Index, on a LOG scale, since 1983:


The current and ongoing characteristics of our economic situation are "textbook" (pre)conditions to substantially depreciate a currency. These (pre)conditions include, but are not limited to:

    Very low interest rates
    Truly outsized interventions (including "money printing");
    Ongoing large budget deficits and deficit spending "as far as the eye can see."
    Substantial federal debt; depending upon specific estimate used, at multiples of GDP when viewed on an accrual basis
    Many exceedingly large asset bubbles - and future implications
    An economic system highly vulnerable to financial instability


As I've discussed in previous posts, perhaps the main reason for the complacent attitude toward future U.S. Dollar levels is that the U.S. has never experienced substantial economic problems brought on by currency weakness. It appears as if many people will worry about a significantly lower U.S. Dollar if - and when - it occurs.

There are many problems with this approach. Based on various fundamental and technical analysis factors, I believe that should the Dollar fall substantially from these levels - as I expect - the decline will prove rather intractable - i.e. once it falls, it will stay lower and "reversing the slide" will prove very difficult.

A substantial Dollar decline will have many ill-effects, and will likely be akin to opening a "Pandora's Box" of various economic and financial problems. This currency weakness will create an entirely new set of severe economic problems and challenges, in addition to other problems that will almost certainly coexist at the same time of the Dollar's decline.

While undoubtedly many people will expect any Dollar decline to be gradual and thus "manageable," such an expectation will unfortunately prove too optimistic.

Link  -
http://seekingalpha.com/article/1795002-thoughts-concerning-the-u-s-dollar?sourc...
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So, is the RBA planning on having a lower OZ$ to the US$ exchange rate?

Because, IF they are, then there may be an almighty race to the bottom, as the US$ goes into Decline & the RBA takes off, chasing that US$ Decline?

If so, our $9 Billion may not last too long?

Does The Federal Reserve Have Any Idea What It Is Doing?

Over the past year, the Federal Reserve added $991.2 billion to its security holdings.

On August 1, 2007, the Federal Reserve held total assets of $907.5 billion.

On October 30, 2013, the Federal Reserve held total assets of $3,886 billion.

On October 30, 2013, commercial banks held reserve balances with Federal Reserve banks that amounted to $2,435 billion. This balance is $1,000 billion higher now than it was on October 31, 2012.

Year-over-year through the second quarter of this year, real GDP in the United States rose by 1.6 percent. In 2012, real GDP rose by 2.8 percent year-over-year in its second quarter. The same figure for 2011 was 1.9 percent and in 2010, the rate of increase was 2.7 percent.

Year-over-year through the third quarter of this year, industrial production in the United States rose by 2.5 percent. In 2012, industrial production rose by 3.3 percent year-over-year in the third quarter. The same figure for 2011 was 2.5 percent and in 2010, the rate of increase was 7.5 percent.

The current policy of the Federal Reserve is to acquire $85 billion in securities every month.

In the banking system, demand deposits continued to rise at double digit rates, 11.4 percent, year-over-year, in the same general neighborhood as they have increased over the past four years. Also, savings deposits rose by 8.5 percent, year-over-year while small time deposits dropped by more than 16.0 percent.

Thrift institutions continue to decline in importance.

Bottom line, people continue to move money from short-term low interest-bearing assets into currency and transaction balances. The increase in the money stock measures continues to come from portfolio re-arrangement and not from monetary stimulus.

Therefore, from the financial side, the economy does not seem to be benefiting much at all from the quantitative easing of the Federal Reserve.

Still, the Federal Reserve continues ahead with quantitative easing stating that it will continue to follow this policy until the economy shows signs of a faster recovery.

But, what if the economy is not capable of sustaining faster economic growth at this time. What if the "new" normal trend for economic growth is around 2.0 percent?

The United States just may not be able to return to the standards of the past sixty years. The credit inflation we have experienced since the early 1960s may not work any more.

Additionally, maybe the behavior of people has changed.

We observed these changes in three different areas. The grand period of inflation in housing prices began and continued on until the middle of the 2000s.

Now, with the Federal Reserve moving into high gear with its quantitative easing, the wealthy are moving money into financial transactions and not into manufacturing. These monies have learned over the past fifty years what really pays in an environment in which the Federal Reserve and the federal government do nothing but pump more and more money into the economy. Hence, Mr. Bernanke and the Federal Reserve are just feeding the monster that they have created.

My fundamental question then becomes…what should market expectations be?

The financial markets have learned over the past fifty years that sustained credit inflation, even at much lower levels than we are experiencing now, produces substantial increases in asset prices…houses, stocks, bond prices, commodities, and so on and so forth…and not in real output or flow prices Sustained increases in credit inflation do not create sustained increases in economic growth or in employment.

So, the rewards for continuous financial injections come in finance…not in real output! The Federal Reserve has not seemed to catch on to this.

Link -
http://seekingalpha.com/article/1799982-does-the-federal-reserve-have-any-idea-w...
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The fact is, the FedRes is simply treading water, until the last hair breaks the camels back!

In fact, the Real, Major Global Economic Drivers are now leveling off, prior to going into Decline and there is nothing the FED or anyone else can do, to prevent that from happening!

Those major Drivers are -
1) Demographics - Population Growth & Aging.
2) Energy - Supply Decline & Price increases
3) Climate Change - The Goldilocks climate is now ending.