Everyday seems like Ground Hog Day. The stock market sells off early in the trading session only to bounce up and rally throughout the afternoon. The catalyst for the stock market is not the positive economic data such as the jobs report, or the price of gasoline and food. It is not the great corporate earning from Alcoa Inc.(NYSE:AA), or Equinix Inc.(NASDAQ:EQIX). No it is not any of those things, it is the decline and deterioration in the U.S. Dollar Index. It is the decline in the purchasing power of 76 million baby boomers and countless retirees in the United States.
When this stock market rallies it is because of the falling U.S. Dollar Index. Therefore, there is not real wealth being created in the stock market. In the 1990's the U.S. Dollar Index rallied with the stock market and that was real wealth creation. This is not real wealth because your purchasing power is diminishing while your assets increase. This is a zero sum gain. It is a wash at best and really nothing more.
Quantitative easing part two is all the rage right now. The only thing QE-1 did was kill the U.S. Dollar. America can't compete with China or anyone else just because the U.S. Dollar is falling or declining everyday. No, in fact the U.S. can only compete when China raises their wages to the levels that are paid here in the United States. We all know that is not going to happen.
Most states and cities in the U.S. are broke. How are they going to fund or pay for these pensions and state obligations. Forget Greece, in the United States we have fifty Greece's. The effort made by all these central banks to crush the U.S. Dollar will have repercussions and it won't be pretty. Keep all your Jewelry and gold because we may need it to barter for goods one day if this dollar gets any weaker.