Any prolonged downturn in stocks will trigger a bull market in greenback, period. Even if temporary. That seems like about now or very soon.
Not wildly. Just not a bear. Figure 90 on the index is the equilibrium point now. I'm actually, although I realize it's a bit hard to tell, a long-term gold bull: I think we're smack in the middle of it. But I also think it's sideways on gold until further notice, and therefore any move to be a bear on the dollar or a bull on gold is early. And early is wrong. No one remembers history: the dollar didn't collapse in the last gold bull. By the end of it, it was back to where it started. A gold bull is not necessarily a dollar bear; it's a currency, or if you're a hardcore gold bug, paper bear. IOW, gold goes up against all currencies, while the currencies bounce around against each other. Also, it's not necessarily an equities bear. Equities bottomed in 1974 in the last cycle, and by the time gold peaked in 1980, they were actually on their way to recovery. It didn't feel that way, but a lot of people made some nice money trading in the post-1974 environment. They did, however, spend a lot of their time looking jealously over at the guys in the commodity pits. Just my 2 ounces. (Was that guru-worthy? Ya think I can start a newsletter?)
So, once the recap merry-go-round stops how does the Fed sterilize those dollars that were printed for the non-Treasury "assets" that are now on it's books? TARP, TALF, et al...
short the US Dollar Index futures contract. But you cannot just expect a currency to do what you plan. A lot of things can happen to your strategy en route. and if the dollar tanks, a lot of the world currencies will likely follow...
Does the US govt or the Fed really control the money supply? If I open a bank and you bring in $1000 I can use it as backing to lend $33,000.. I just created money and the Fed and all don't even know about it until somebody tells them...
Not a single dollar is being destroyed by banks writing off loan losses. This money flowed into the economy the day the loan originated... If you borrow 50k from the bank and walk out the door and spend it. That money joins the economy and regardless of if the bank ever gets paid back or not that money is still in existance.
True...but it affects the balance sheets of the banks. Then when other borrowers pay back loans to the bank, in order to replenish reserve requirements, or for the bank to pay its own expenses, those "dollars" are never loaned back out when in a normal lending environment, they would be. So, there is an indirect relationship between when loans are defaulted, and other dollars are removed from the money supply.