Looking Back on the Grasshoppers' Indian Summer

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Previously
by Gerald Celente: From
Currency and Trade Wars to RealWars

 

 
 

It was as
though the winter would never arrive. The slumbering summer stock
markets of 2010 lept to life. September recorded the best market
month since 1939. In early October, with Wall Street jubilating,
it cracked the 11,000 ceiling … a mere 3,000 points shy of
its October 2007 high.

Nothing, not
even the facts, could mute the summer chirping of gleeful grasshoppers
on that ceiling-cracking Friday. Not the Wall Street Journal
front-page headline, “Dollar’s Fall Roils World.”
Not Bloomberg’s headline, “Payroll Drop in U.S. Exceeds
Forecasts.” Nor the fact that 95,000 jobs were lost in September
… and that the jobless rate had topped 9.5 percent for 14 straight
months – the longest losing stretch since the 1930s. No news
was bad news on that buoyant October 7th market day.

The recession
was over. The Business Cycle Dating Committee of the National Bureau
of Economic Research, the official arbiter of such matters, officially
cited June 2009 as the date the recession had “officially”
ended.

“We will
not have a double-dip recession at all. I see our businesses coming
back almost across the board. I am a huge bull on this country,”
exulted Grasshopper-in-Chief, Warren Buffett, “America’s
most beloved investor,” according to Forbes magazine, which
ranks billionaires for numbers of billions and also for belovedableness.

In full Indian
Summer delirium, the “best and brightest” and richest
of grasshoppers appeared incapable of believing that winter was
on its way, even though the signs were everywhere.

Unemployment
kept rising, GDP was slowing, the trade deficit worsening, and despite
trillions already squandered on ineffective stimulus programs, the
Fed signaled it would keep pumping even more trillions into the
economy in the belief that what didn’t work before would somehow
work later.

The dollar
was falling like autumn leaves. Unintended or not, what the Fed’s
money dumping policies had achieved was to devalue the currency.
Couldn’t the grasshoppers see the consequences?

Commodities
Prices Soar as US Dollar Hits 10-Month Low

The US dollar
tumbled to a 10-month low against a basket of currencies yesterday,
lifting oil prices and driving up gold to a record high.

The dollar
has been weakened by concern in global financial markets that
the Federal Reserve will soon embark upon a programme of quantitative
easing (QE) – asset purchases – in order to rescue a
floundering economic recovery.

Investors,
fearing the world’s most powerful central bank will soon
pump more dollars into the financial system, have fled from the
greenback for the safety of gold and crude oil futures. Gold prices
rallied to record highs of $1387.10 an ounce yesterday before
falling back to around $1375.

Silver, oil
and copper also rose in value on the back of dollar weakness.
Since commodities are priced in dollars, they are more of a bargain
for traders who buy them with foreign currencies. (Herald Scotland,
15 Oct 2010)

The aftermath
of a plummeting dollar was as predictable and ineluctable as winter
following autumn. The defining element was the price of gold. And
it was not only Fed policy that was driving it higher.

“War”
had been declared!

“We are
experiencing a currency war,” said Brazilian Finance Minister
Guido Mantega. “Devaluing currencies artificially is a global
strategy.”

In an effort
to juice exports, nations vied with each other to see who could
devalue their currencies the most. What an ingenious concept –
printing cheap paper!

For exporters,
at least it held open the possibility of providing a temporary boost.
But for everyone else, it simply meant that it would take more paper
to buy what less paper used to buy. That’s what you get when
you devalue the currency.

The world was
flooded with cheap paper. It was very, very easy to understand why
gold prices were going higher and why they would continue to go
higher still.

Reprinted
with permission from The Daily
Reckoning
.

November
23, 2010

Gerald Celente
is founder and director of The Trends Research Institute, author
of Trends
2000
and Trend
Tracking
(Warner Books), and publisher of The Trends
Journal. He has been forecasting trends since 1980, and recently
called “The Collapse of '09.”

The
Best of Gerald Celente

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