• 1 hour Meat And Dairy Account For 14.5% Of Global Greenhouse Gasses
  • 20 hours Social Media Influencers, Dream Job Or Billion-Dollar Fraud?
  • 22 hours Private Investors Turn Back On Mining
  • 1 day Four Big Pharma Companies Reach $250 Million Opioid Settlement
  • 2 days ‘Click To Pray’, The Vatican’s Latest Attempt To Draw In Millennials
  • 2 days 3 Oil Stocks Ready To Weather The Geopolitical Storm
  • 3 days Gold Miners Eye Big Third Quarter Profits
  • 3 days The U.S. Doubles Down On Domestic Lithium Production
  • 4 days Reddit Trader Scores 14,000% Returns On Rogue Trade
  • 5 days The Tangled Web Stretching From Turkey To DC
  • 5 days The U.S. Dollar Eyes Greater Upside
  • 5 days More And More Americans Believe A Recession Is Looming
  • 5 days Is The Pot Stock Boom Over Already?
  • 6 days How The California Utility Crisis Could Have Been Avoided
  • 6 days The Ugly Truth About Investing In Private Equity Deals
  • 7 days The World Is Facing A $1 Trillion Food Waste Crisis
  • 7 days Is It Time To Buy The Dip In Gold?
  • 7 days The History Of Oil Markets
  • 8 days Three Stocks To Watch Ahead Of Earnings Season
  • 8 days Markets Flat As Bulls And Bears Battle It Out
Zombie Foreclosures On The Rise In The U.S.

Zombie Foreclosures On The Rise In The U.S.

During the quarter there were…

The Problem With Modern Monetary Theory

The Problem With Modern Monetary Theory

Modern monetary theory has been…

Another Retail Giant Bites The Dust

Another Retail Giant Bites The Dust

Forever 21 filed for Chapter…

John Rubino

John Rubino

John Rubino edits DollarCollapse.com and has authored or co-authored five books, including The Money Bubble: What To Do Before It Pops, Clean Money: Picking Winners…

Contact Author

  1. Home
  2. Markets
  3. Other

US Nearing Recession, Dollar Falling Hard

The dollar soars by a record amount versus the euro and the yen in 2014. And economists predict strong growth in 2015. Really? If a country can have a rapidly-appreciating currency with all the benefits that that confers, and strong economic growth with all the obvious advantages that that confers, why wouldn't everyone be going for powerhouse currencies?

Because the two things, a strong currency and accelerating growth, tend to be mutually exclusive in the short run, with a strong currency acting like rising interest rates, slowing growth and making debts harder to service.

So it shouldn't be a surprise that the latest batch of US numbers are somewhere between disappointing and catastrophic. First-quarter GDP was flat and is about to be revised negative. Retail sales were flat in April, the first month of the second quarter, with business inventories and import prices pointing in the same grind-to-a-halt direction.

Annual growth in retail sales

The US is now looking at zero growth for the entire first half of 2015. Six years into a recovery, with record low interest rates and a recent doubling of govern ment debt, that's a bit of a dilemma. Especially given the Fed's threat to raise interest rates in the next few months.

Rates clearly are not going to be raised, at least not on purpose. On the contrary, slow growth always and everywhere leads panicked governments to break out the stimulus. And the dollar is reacting to this prospect exactly as one would expect, by falling like a stone in the past month.

DXY Daily Chart

Gold, meanwhile, is acting like the reciprocal of the dollar, adding $30 an ounce in the past two days.

Spot Gold Price Chart

At the risk of excess repetition, the US is obviously losing the currency war and will soon be forced into a new offensive. Negative interest rates, here we come.

 

Back to homepage

Leave a comment

Leave a comment