Since the last time I addressed the dollar it had breached 74. Well, now it has dipped momentarily below 73 and is currently just above that line. The real problem is in the trade-weighted dollar as that is really what counts; what does one have to pay on average when importing goods and services. It is at all-time lows.
This is the reason oil and gas prices are doing this:
Further damage could be seen in the GDP report where the net export contribution vanished compared to the last quarter. This is because the US happens to import quite a bit of stuff with its increasingly worthless dollars.
While there has been some competitive devaluation as everyone wants to get a piece of that mythical destroy-your-own-currency-to-boost-exports economy, the US is on the lead. Lately it has been enough for Bernanke to start speaking and the dollar starts plunging pushing everything of value up in price. Gold and silver are trending towards new records on a weekly basis because they are real money as in something whose value you cannot destroy by printing more of them for the government to use.
Bernanke is rapidly approaching a situation where he is forced to print more to sustain the illusion of wealth but having a negative marginal benefit for printing fresh federal reserve notes. Withdrawing QE would trash Obama’s chances in the next election, but the continuation of QE will guaranteed trash his supporters’ standard of living. It remains to be seen how long will the teleprompter last?