Just as expected, last Friday the House of Representatives said yes to 700 billion bail out evil plan after Senate on last Wednesday. So here's the question: they really think the plan will save the US economy or they have to agree because of political pressure?
EITHER WAY, THEY ARE STUPID.
The House of Representative members are selected by the American citizen to represent them in the government. They suppose to fight for the people of US and give American people the best. They did the absolute correct thing during the first vote for the 700 billion US dollar bail out plan but unfortunately on the second vote, the evil prevail......
No strong economy has weak currency and everybody knows it. Look at China's Renminbi, China government try desperately to keep it down for international trade purposes(increase export) but it still appreciate like crazy against major world currency simply because China economy are sound.
How can members of the House of Representative don't know something as simple as that?
Well, maybe they know but they have to vote yes because of political pressure. In this case, they are even more stupid. They did the wrong and horrible thing to American people.
We all know the only way central bank of a country can influence in its currency is using monetary policy which consist of interest rate and money supply. Other factors(uncontrolled by central bank) such as soundness of economy, inflation rate, unemployment rate, balance of payment etc. will help currency investors do their judgement.
Federal Reserve already keep the interest rate at a unbelievable low level of 2.0% and now they wanna put 700 billion into the economy? How can US dollar survive from that?!
However I receive some email asking me why US dollar still rally in the past week?!
Here's my thought: short term market is always irrational. We saw the dow recover 485 point after the 777 point loss. That's irrational. We saw people still buy Freddie mac, fannie mae, AIG etc., that's irrational. We even see gold went down after the 700 billion plan agreed. That's absolutely insane.
The Dollar has been rallying for the past week and maybe people who are trend follower still long dollar, maybe a short covering for USD, maybe intervention by Fed or foreign central bank, maybe intervention by US pension fund......
Who cares, short run will always be irrational so we should only focus on medium and long run. The puzzle will be solved and suddenly everybody realize that US economy sucks, and run away from it, and it collapse.
Compare to great depression of 1929, situation now is a lot different. The only reason Franklin Roosevelt and his administration can save US from GD 1929 is because at that time, US was the top craditor in the world. US controlled more than 70% of world loan during that time so they can print so much money to save the US economy. Now US are the biggest debtor in the world. US total debt is more than 60% of world debt.
The good news is Federal Reserve can still print money and try to save the economy but the bad news is it will destro the Dollar and eventually the economy! Ask your congressman, how can Fed save the US economy if US dollar collapse and how can US dollar not collapse?!
I have a short term investment strategy that i always use and it's pretty profiting. Be a trend follower but only follow trend when you think it's the right trend. If it's not. just wait. Example: now US dollar is appreciating and it's not right so just wait. When the trend reverse and USD is depreciating, short it because it's the right trend. Let the trend run until that run reverse by more than 0.618%. If that happen, take our profit and wait to short again in the next trend reversal. Never invest against the trend!!! Wait for trend to reverse then only you invest. It should help you profit from the irrational short term irrational trend.
Anyway, medium and long term investment is the best option. Think rational and don't be influenced by folks that talk shit on CNBC and Bloomberg. If you think gold will rise, then buy it because you know 2-5 years from now, your gold will be the true "precious" metal!!!
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