Decreasing Dollar Cause For Panic?

dollar decline Well, as I expected, we are continuing to see a rather strong "bouncing bottom" at around the 10000 level of the Dow. This last bounce has taken us above and beyond the 10700's, which seems to be a trend at this point. However, signs of a decreasing dollar is starting to raise concerns for investors.

Nothing could be more dangerous to our economy at this point than a sustained, low value dollar. There already exists massive threats of hyperinflation as the government continues to run ramped with government spending and bailouts. Recent jumps in gold are confirming investor's worries about inflation as gold prices are the best measure for investor's sentiment towards the dollar.

Many worry that declining dollar will not continue to "prop up" the market. A declining dollar would also equate to a decline in US consumer's spending power, which in turn will be a direct effect on GDP and economic growth. It is because of this, eyes are closely watching and hoping that we see strides of progress in regards to the dollar's strength.

There are others who feel that the dollar is primed to launch at this point. Some optimists feel that they expect to see some big gains in the dollar in the short term. I cannot agree with them at this point, when considering other lagging indicators that are still existing at this point, but we will see.

One big problem with a declining dollar is that we have not seen much inflation in the marketplace, which would be a normal sign of inflation. So although we are seeing the value of the dollar go down, consumers do not have an inflated amount of dollars in order to compensate for the drop in value. Thus the drop in spending power. Although it may seem to some not a big deal, the value of the dollar is critical at this point. Happy Trading.

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